The Arbitration Provision Was Buried Somewhere.
Grave digger at work. Woodbine, Iowa. 1940. Photographer: John Vachon. Library of Congress.
When AECOM, Inc. was sued by a subcontractor, Remedial Construction Services, LP (RECON), it unsuccessfully tried to compel arbitration, relying on a Prime Agreement between AECOM and Shell Oil, which Prime Agreement did contain an arbitration agreement and which Prime Agreement had been incorporated by reference into the agreement between AECOM and RECON. The incorporated Prime Agreement was 151 pages long. The trial court denied AECOM's motion to compel arbitration and to stay litigation, and the Court of Appeal affirmed. Remedial Construction Services, LP v. AECOM, et al., B303797 (2/6 6/15/21) (Perren, Gilbert, Tangeman).
COMMENT: AECOM missed drafting solutions that might have solved the problem for it. First, as the apparent master of the agreement with its subcontractor, AECOM could have included an effective arbitration provision in the contract between it and RECON. Second, if it was going to rely on incorporation by reference of the Prime Agreement, it could have included language in a conspicuous font pointing directly to the arbitration provision in the 151-page Prime Agreement, and asked for written acknowledgment that that language was incorporated, read, understood, and agreed to by the subcontractor.
Despite the legislative predilection to unburden the courts and send cases to arbitration, quite a few motions to compel arbitration continue to fail for lack of an effective agreement to arbitrate.
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