Originally from World Arbitration And Mediation Review (WAMR)

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NATIONAL ARBITRATION FORUM CASE

SUMMARIES
By Kirk Knutson* and Ryan Chandlee**

I. ARBITRATOR MUST DECIDE WHETHER PARTY COMPLIED WITH
CONDITIONS PRECEDENT TO ARBITRATION
The Colorado Court of Appeals has followed the majority rule and held
that an arbitrator, not the court, must decide whether a party has complied
with conditions precedent to arbitration. This issue would not arise under
the current version of the Colorado Uniform Arbitration Act because the
current version expressly delegates the question to the arbitrator.
In BRM Construction, Inc. v. Marais Gaylord, L.L.C., No. 06CA0559,
2007 WL 1839799 (Colo. Ct. App. June 28, 2007), BRM Construction
(BRM) and Marais Gaylord (Marais) entered into a contract whereby BRM
would construct a condominium project on land owned by Marias. The
contract contained an arbitration clause.
When a payment dispute arose, BRM sued to foreclose a mechanic’s
lien and simultaneously filed a motion to stay the action pending arbitration.
In opposing the stay, Marais argued that BRM failed to comply with two
conditions precedent to arbitration: (1) that a claim must first be submitted
to the project architect; and (2) that a claim must be submitted within 21
days of the underlying incident. The court issued an order staying the action
pending arbitration.
The arbitrator awarded BRM $423,577.63. Marais filed a motion to
vacate the award, arguing that the arbitrator exceeded his powers and that
there was no agreement to arbitrate the dispute. The trial court rejected
those arguments and confirmed the award.
On appeal, the court held that BRM’s compliance with conditions
precedent to arbitration was an issue for the arbitrator to resolve. The court
gave two separate reasons for reaching this holding.
First, the court found that the arbitration agreement gave the arbitrator
authority to decide questions of arbitrability because it required the
arbitration of any “claim” and defined “claim” to include “a demand or
assertion . . . seeking . . . interpretation of Contract terms.” In support of
this finding, the court explained that questions of arbitrability naturally
depend on the interpretation of contract terms.