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A Unilateral Arbitration Clause Isn't Generally Void

Wednesday, August 01, 2012 05:41 am

 

Arbitration Clause

U.S. f/u/b/o Maverick Constr. Management Services, Inc. v. Consigli Constr. Co., 2012 U.S. Dist. Lexis 77718 (D. Me. June 5, 2012)

A contract clause that leaves the arbitration v. litigation choice entirely up to one party isn't unenforceable.

On a U.S. Navy construction project at the Portsmouth Naval Shipyard, general contractor Consigli Construction Co. (Consigli) terminated for convenience its subcontract with Maverick Construction Management Services, Inc. (Maverick). Afterwards, Maverick sued Consigli and its surety to recover nearly $2 million in cost overruns the sub claimed resulted from site conditions and delays caused by the Navy. The defendants moved to compel arbitration in accordance with the subcontract's arbitration clause. Maverick alleged that the arbitration clause was unenforceable because it was "illusory."

The clause that gives choices still binds

Maverick argued that the arbitration clause did not bind Consigli to the results of arbitration. The court disagreed.

The clause gave Consigli alone the right to decide whether to submit subcontract claims/disputes to arbitration or to judicial decision. The clause also incor[...]

 
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