Arbitration clauses are included in many commercial contracts, particularly in government subcontracts. We often see arbitration clauses as tools to limit the parties’ exposure to protracted litigation if a dispute arises under the contract.
Maryland, among many other state and federal courts, has an extremely strong public policy of favoring the enforcement of arbitration agreements. The Maryland Court of Appeals has explained that the “public policy favoring such agreements is understandable, as arbitration agreements are generally a less expensive and more expeditious means of [resolving legal disputes]. The favorable status in which arbitration agreements are afforded in Maryland has been made explicitly evident by the Legislature in the enactment of the [Maryland Uniform Arbitration Act].[i]” A recent decision from a Maryland appellate court, Gannett Fleming, Inc. v. Corman Construction, 243 Md. App. 376, 424 (2019), extended this deference to arbitration agreements in a way that contracting parties may not anticipate when they enter their contracts.
Typically, a breach of contract action in Maryland would be time-barred after three years. Despite this civil statute of limitations, the court in Gannett Fleming allowed a party to proceed to arbitration when they had waited eight years to bring their action. The parties’ arbitration clause was very broad: “any disputes not resolved by mediation shall be decided by arbitration under the Construction Industry...
