A growing number of construction contracts now contain arbitration clauses. However, even with an arbitration clause, you may find yourself in court because your counterparty refuses to initiate arbitration.
You have options. You may assert your right to arbitration by submitting a motion to compel arbitration. Both the Federal Arbitration Act (FAA) and the Texas Arbitration Act (TAA) require courts to compel arbitration if there is a valid agreement to arbitrate the dispute in question. See 9 USC § 4; Tex. Civil. Prac. & Rem. Code § 171.021. However, you may decide that the nature of the dispute, the amount in dispute, and the venue in which you are located do not justify the costs of enforcement and actual arbitration. This may be the case if the amount in dispute is limited and a quick resolution is likely. However, you should normally insist on your contractually negotiated right to arbitration.
What happens if the court denies your request to compel arbitration? You have options. Both the FAA and TAA allow immediate appeal of denials of a request to compel arbitration, but you must act quickly. See Tex. Civil. Prac. & Rem. Code §§ 51.016, 171.098; 9 USC § 16. In Texas, you must file your complaint within 20 days of signing the order. Regarding Whataburger Restaurants LLC645 SW3d 188, 190 & n.1 (Tex. 2022).
Should you appeal? Normally yes. The Supreme Court has ruled that a district court must stay its proceedings while the interim appeal against the order denying the compulsory motion is pending. See Coinbase, Inc. v. Bielski599 U.S. 736, 740 (2023). An appeal in Texas subject to the FAA will be accepted under the same circumstances as an appeal from a federal district court's order. Tex. Civil. Prac. & Rem. Code § 51.016. Due to the stay of proceedings before the trial court, the delay in final resolution and the associated costs of the appeal, your counterparty may reconsider its objection to arbitration – it contractually agreed to arbitration before the dispute arose. Even if this is not the case, the delay gives you more time to work on resolving the dispute before the costs of arbitration arise.
If you find yourself in court despite an arbitration agreement, know that you have options.
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