B. Contracting to Arbitrate
Most industry standard contracts contain provisions calling for arbitration in lieu of traditional litigation. ConsensusDocs, AIA, and EJCDC standard-form contracts all contain arbitration provisions. Further, these standard-form contracts usually contain provisions either requiring or making mediation available for the parties to resolve their disputes prior to arbitration. Thus, since alternative dispute resolution has become common in the construction industry, many private contracts also contain mediation and arbitration provisions. The common reasons for choosing ADR, including cost savings and the informal nature, are well known. Before ADR is initiated, however, it is important to know the law which governs the process.
1. Enforcing Arbitration Clauses
Although a party has signed a contract expressly agreeing to arbitrate disputes that arise from their contractual relationship, they may seek to avoid arbitration, often because of a perceived unfairness. South Carolina policy favors the arbitration of disputes.2 Any disputes involving the arbitration provision of a contract should be resolved in favor of arbitration.3 Faced with a party refusing to arbitrate, South Carolina courts summarily determine whether a valid agreement to arbitrate exists.4 When examining a motion to compel, a court should only deny the motion "where the clause is not susceptible to any interpretation which would cover the asserted dispute."5
2. Waiver
The above should not suggest that the right to enforce an arbitration agreement cannot be waived. When one party seeks to compel arbitration after traditional litigation has been initiated, a party asserting waiver must show prejudice through an undue burden caused by the delay in demanding arbitration.6 Whether a party has waived their right to arbitrate depends on the facts of each case.7
To have a better understanding of what triggers waiver, consider the following examples. The court in General Equipment & Supply Co. v. Keller Rigger & Construction, SC Inc. ,8 held that waiver did not occur despite arbitration being demanded after nearly eight months had passed since litigation was initiated. Only routine administrative matters and limited discovery had taken place, which did not prejudice the party opposing arbitration.
The opposite holding occurred in Evans v. Accent Manufactured Homes, Inc.9 There, the defendant sought to compel arbitration nearly two years after the complaint had been filed.1...
