After a payment dispute in a construction case, the concrete subcontractor filed a lawsuit in circuit court against the general contractor and the owner/developer. The Defendants filed a motion to stay and compel arbitration pursuant to the arbitration provisions in both the prime contract and the subcontract. The circuit court stayed the circuit court proceedings and ordered the parties to arbitrate the case “in accordance with the terms of their agreements.”
A dispute arose regarding where the arbitration proceedings should he held. The subcontractor argued that its claims are governed by a section of the arbitration provision in the subcontract regarding disputes that involve some aspect of the prime contract. That section required such disputes to be resolved under the arbitration provision in the prime contract. The prime contract required disputes to be arbitrated in Alabama. However, the Defendants argued that the subcontractor’s claims were governed by a separate section of the arbitration provision in the subcontract requiring disputes to be arbitrated in Cuyahoga County, Ohio.
On January 3, 2018, the American Arbitration Association (AAA) made an administrative determination that the arbitration would be held in Alabama. Subsequently, on January 10, 2018, the AAA informed the parties that its administrative determination regarding the location of the arbitration proceedings would be subject to review by the arbitrator.
On January 11, 2018, before the case was brought before an arbitrator, the Defendants filed in the circuit court an “Emergency Motion to Clarify Order Compelling Arbitration.” In the motion, the Defendants argued that the subcontract required that the claims be arbitrated in Ohio. Further, they argued that the provision in the prime contract requiring arbitration to be held in Alabama is irrelevant. Accordingly, the Defendants requested the circuit court to order the arbitration take place in Ohio. On January 22, 2018, the circuit court ordered that the arbitration be held in Ohio. In that order, the circuit court purported to amend its earlier order compelling arbitration. The plaintiff subcontractor then appealed.
Upon appeal, the plaintiffs argued that the circuit court lacked the authority to order the arbitration be held in Ohio. Furthermore they argued that the circuit court’s initial order compelling arbitration was a judgment under Rule 54(a) of the Alabama Rules of Civil Procedure and cannot be revisited without following the procedures set forth in Rule 59(e) for filing motions to alter, amend, or vacate a judgment. They argued the Defendants’ “Emergency Motion to Clarify Order Compelling Arbitration” was simply a Rule 59(e) motion that was filed 136 days after the entry of the original judgment, well outside of the 30-day window allowed under Rule 59. The Defendants countered that their motion was not a Rule 59(e) motion, but a motion seeking a “clarification” of the judgment compelling arbitration, which is not subject to the 30-day time limit found in Rule 59(e).
The plaintiffs also argued that regardless of how the order of January 22, 2018 is characterized, the circuit court lacked the authority to order the parties to arbitrate in Ohio for another reason. It was undisputed that the AAA’s Construction Industry Arbitration Rules governed the arbitration in this case. Both the prime contract and the subcontract provided that disputes must be decided under the Construction Industry Arbitration Rules. Rule 9(a) of the Construction Industry Arbitration Rules states, “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement.”
In regards to the location of the arbitration proceedings, the Supreme Court held: “Which argument is correct is not for this Court or the circuit court to decide; rather, that is an issue for the arbitrator to decide under Rule 9(a) of the Construction Industry Arbitration Rules. The circuit court lacked the authority to order that the arbitration proceedings be held in Ohio.” Accordingly, the high court reversed the circuit court’s order and remanded the case.