A growing number of construction contracts now contain arbitration clauses. Yet, even with an arbitration clause, you may still find yourself before the court because your counterparty refuses to arbitrate.
You have options. You can insist on your right to arbitrate by filing a motion to compel arbitration. Both the Federal Arbitration Act (the FAA) and the Texas Arbitration Act (the TAA) require courts to compel arbitration when there is a valid agreement to arbitrate the dispute at issue. See 9 U.S.C. § 4; Tex. Civ. Prac. & Rem. Code § 171.021. You may decide, however, that the nature of the dispute, the amount in controversy, and the venue you find yourself in do not justify the cost to compel and actually arbitrate. This may be true when the amount in dispute is limited and a quick resolution is likely, but ordinarily, you should insist on your contractually bargained for right to arbitrate.
What happens if the Court denies your motion to compel arbitration? You have options. Both the FAA and the TAA allow for the immediate appeal of the denial of a motion to compel arbitration, but you must act quickly. See Tex. Civ. Prac. & Rem. Code §§ 51.016, 171.098; 9 U.S.C. § 16. In Texas, you must file your notice of appeal within 20 days after the order is signed. In re Whataburger Restaurants LLC, 645 S.W.3d 188, 190 & n.1 (Tex. 2022).
Should you appeal? Ordinarily, yes. The Supreme Court has held that a district court must stay its proceedings while the interlocutory appeal of the order denying the motion to compel is ongoing. See Coinbase, Inc. v. Bielski, 599 U.S. 736, 740 (2023). An appeal in Texas subject to the FAA is taken under the same circumstances that an appeal from a federal district court’s order is taken. Tex. Civ. Prac. & Rem. Code § 51.016. With the stay of proceedings in the trial court, the delay to the final resolution, and the inherent costs of appeal, your counterparty may reconsider its objection to arbitration—they did contractually agree to arbitrate before the dispute arose. Even if they don’t, the delay gives you extra time to work on resolving the dispute before incurring the expense of arbitration.
If you find yourself in court notwithstanding an agreement to arbitrate, know that you have options.
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