New International Arbitration Study Offers Construction Dispute Insight

This article was published in Law360 on December 4, 2019. © Copyright 2019, Portfolio Media, Inc., publisher of Law360. It is republished here with permission.
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Albert Bates Jr.
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R. Zachary Torres-Fowler

On Nov. 21, the Queen Mary University of London School of International Arbitration, in partnership with the U.K.-based law firm Pinsent Masons LLP, released its ninth annual international arbitration survey focused on international construction disputes.

As a nod to the significance the construction industry plays in the field of international arbitration, the 2019 Queen Mary University survey marks the largest industry-specific survey its School of International Arbitration has ever conducted and offers insights that will undoubtedly be used for years to come.

While the survey data and accompanying report provide a granular level of analysis concerning a wide variety of topics, below are some of the key takeaways of interest to U.S. practitioners.

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Alaska’s Supreme Court Holds That Executing a Settlement Agreement Releases Parties from Contractual Obligation to Arbitrate Disputes

SMJ Gen. Constr., Inc. v. Jet Commer. Constr., LLC, No. S-16785/16985, 2019 BL 131640 (Alaska Apr. 12, 2019)

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Ryan R. Deroo

In 2016, Jet Commercial Construction, LLC (“Jet”) entered into a subcontract with SMJ General Construction, Inc. (“SMJ”) to supply materials and labor for the construction of a restaurant in Hawaii.  The subcontract contained a dispute resolution provision that required the parties to first mediate any dispute and then submit it to arbitration if mediation was unsuccessful.  It also included a choice-of-law and venue provision designating Oklahoma Law and the courts of Cleveland County, Oklahoma for any lawsuits pertaining to the Agreement’s enforcement.

Continue reading “Alaska’s Supreme Court Holds That Executing a Settlement Agreement Releases Parties from Contractual Obligation to Arbitrate Disputes”

When a Flow Down Provision Doesn’t Flow Up: Oregon Appellate Court Holds That a Flow Down Provision From a Prime Contract With an Arbitration Clause Does Not Grant Subcontractors a Right to Compel Arbitration With Owner

Eugene Water & Elec. Bd. v. MWH Americas, Inc., 2018 Ore. App. LEXIS 879 (July 25, 2018)

On July 25, 2018, an Oregon appellate court concluded that a pair of subcontractors could not compel an owner to arbitrate its claims against them by virtue of a “flow-down” provision in a prime construction contract which also contained an arbitration clause.  The case is a reminder that principles of contract interpretation govern the enforcement of arbitration agreements and that courts will not compel arbitration where both parties have not expressly consented to arbitrate their disputes.

As part of an improvement project for the Leaburg Dam near Eugene, Oregon, the Eugene Water and Electric Board (“EWEB”) entered into a prime contract with Advanced American Construction (“AAC”) as the general contractor for the project.  AAC subsequently entered into subcontracts with MacTaggart, Scott & Company Limited (“MacTaggart”) and Olsson Industrial Electric, Inc. (“Olsson”).  When the improvements to the Leaburg Dam failed, EWEB filed a complaint in Oregon state court against AAC and, shortly thereafter, asserted claims against the two subcontractors in an amended complaint.

During the proceedings, AAC sought to compel arbitration of EWEB’s claims against AAC because the prime contract contained an arbitration clause.  As litigation proceeded, both MacTaggart and Olsson also sought to compel arbitration of EWEB’s claims against them.  Problematically, however, because MacTaggart and Olson, as subcontractors, were only in direct privity with AAC, and not EWEB, no express agreement to arbitrate existed between EWEB and the two subcontractors.  Continue reading “When a Flow Down Provision Doesn’t Flow Up: Oregon Appellate Court Holds That a Flow Down Provision From a Prime Contract With an Arbitration Clause Does Not Grant Subcontractors a Right to Compel Arbitration With Owner”