Tony Zebouni, Lindell Farson and Zebouni, P.A.
When you sign an agreement with an Owner or Contractor it is important that you read and understand all the provisions of the contract (including those referenced as part of the contract documents). Whether arbitration is mandatory or permissive, the law of which state is to apply and who will decide whether a matter is arbitrable or not are considerations that should not be overlooked,
A recent Florida case (AT&T Services, Inc., et al v. S&S Utilities Engineering, LLC, et al.) dealt with AT&T contracting with S&S Utilities Engineering, LLC to locate and mark its underground lines and equipment prior to excavation projects. S&S filed a complaint in circuit court alleging, among other things, that AT&T frequently required S&S to investigate damage claims at jobsites where it had not been requested to perform any work and assessed “unilateral, unsupportable, grossly inflated” charges for damages in order to avoid paying S&S for its services.
Under the contract, AT&T would pay S&S a unit rate per “locate request” and an hourly rate for labor and equipment. In the event of any damages to AT&T’s property as a result of S&S’s performance or lack of performance under the contract (“supplier-at-fault damages”), AT&T could either demand payment from S&S or deduct the damages from the amount it owed to S&S for its services. The contract contains two arbitration provisions. The first provision provides generally that if the parties are unable to resolve a dispute informally or by mediation, then either party “may initiate arbitration” by providing the other party with written notice of its intent to arbitrate. The parties agreed that any arbitration would be held in Dallas, Texas under the Commercial Arbitration Rules of the American Arbitration Association. The second arbitration provision, applies specifically to disputes related to supplier-at-fault damages and provides that if the parties are unable to resolve a dispute informally, and the claimed amount is at least $10,000, then either party “may elect to initiate arbitration.
Arbitration clauses are usually interpreted as mandatory, even if they use the permissive “may,” unless they require both parties to consent to arbitration or otherwise make clear that one party can opt for litigation over arbitration. Usually, and in this case under Texas law, an agreement to arbitrate is mandatory even though it contains permissive terms such as ‘may’ ” and interpreting a provision that either party “may” submit a dispute to arbitration to mean that either party has the power to require arbitration. Under Texas law, the word “may” in the arbitration provisions means only that either party can initiate arbitration if a dispute cannot be resolved informally; it does not mean that the other party can avoid arbitration once it is initiated.
The parties delegated any questions of arbitrability to the arbitrator by agreeing to arbitrate under the Commercial Arbitration Rules of the American Arbitration Association.