The following post is courtesy of Daniel Dorfman at Harris Winick Harris, LLP.
A Texas Court of Appeals has recently handed down an
important opinion addressing the applicability and enforceability of
arbitration provisions. The case offers important lessons to
developers and owners in the construction industry whose contracts generally
contain arbitration provisions. Seven Hills Commercial LLC v. Mirabal Custom Homes Inc., No. 05-13-01306-CV, --- S.W. 3d ----, 2014 Tex. App. LEXIS 8705 (Tex. App.--Dallas Aug. 7, 2014, no pet. h.).
The appeals court in the Seven Hills decision made clear
that even non-signatories to an arbitration clause may be compelled to
arbitrate their disputes, depending upon the terms of the contract. This means that corporate owner representatives
can compel or be compelled to arbitrate claims pursuant to agreements that they
did not enter into, or which they may not even had knowledge of before the
claims arose.
Moreover, the Seven Hills case demonstrates that it is
permissible for a court to make the initial determination as to whether claims
asserted by any individual actor are subject to arbitration, by comparing the
arbitration clause to the claims being asserted. In other words, the court in Seven Hills
served as a gatekeeper to arbitration: It simply determined that the arbitrator
has the primary responsibility to decide whether parties to a dispute are bound
by an arbitration provision.
