Stan Martin | Commonsense Construction Law LLC | January 28, 2016
A Florida Court of Appeal has concluded that an arbitration clause incorporating the AAA Construction Industry Arbitration Rules means that the parties intended to submit issues of arbitrability to the arbitrator and not to the courts. The parties had used a standard AIA contract form, which referenced the AAA construction rules. The AAA rules, in turn, include the following:
R-9 Jurisdiction
(a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.
(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.
(c) A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.
The AAA construction rules are available here. Note that Rule 7 of the AAA commercial rules is identical.
The Florida court found that the contract language coupled with the AAA rule established “clear and unmistakable” evidence that the parties intended that the arbitrator decide issues of arbitrability. More importantly, from a broader perspective, the court noted that “the majority of federal courts considering similar circumstances where the AAA’s arbitration rules have been incorporated by reference into a contract likewise have found that the parties sufficiently evidenced their intent to have arbitrators, not a court, hear and decide issues of arbitrability.” In support of its conclusion, the Florida court cited to decisions of three different federal Courts of Appeal. The case is Glasswall, LLC v. Monadnock Constr., Inc., 2016 Fla. App. LEXIS 1010 (Jan. 27, 2016), available here (subscription required).
Over the past few years, decisions on arbitrability have parsed the issue of when and how the parties decide to submit arbitrability issues to the arbitrator and not to the courts. As this court noted, a common set of arbitration rules is now being consistently interpreted to place this issue in the arbitrator’s lap.