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Arbitration Clause Can Snare You Even When Dispute Arises From Separate Agreement

Saturday, August 04, 2007 12:33 pm

 

A federal district court enforced a contractual agreement to arbitrate disputes despite the defendant's insistence that that the damages stemmed from remedial work not covered by the contract. Where the clause was unambiguous and broadly written, federal policy under the Federal Arbitration Act (FAA) favored arbitration.

The U.S. Army Corps of Engineers retained J. Kokolakis Contracting, Inc. (Kokolakis) to perform construction work at the U.S. Military Academy in West Point, New York. Kokolakis and Mathusek, Incorporated (Mathusek) entered into a subcontract agreement by which Mathusek would install a gymnasium floor in a West Point facility Kokolakis was constructing.

The subcontract contained the following arbitration clause: "[A]ny dispute between Contractor and Subcontractor shall, at Contractor's sole opti [...]

 
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