Arizona Court of Appeals Division One holds that contracts requiring “arbitration,” without more, mandate binding dispute resolution.

A client signed a fee agreement with a law firm, which governed the firm’s billing in a lawsuit it filed on the client’s behalf.  The agreement required “arbitration” over any fee disputes but neglected to explicitly state whether the arbitration would be binding or non-binding.  Later, the client disputed fees.  The client voluntarily participated with the firm in an arbitration without objection, which resulted in an arbitrator’s fee award in the firm’s favor.  The client still refused to pay, contending the proceeding had been non-binding.  The firm applied for confirmation of the arbitration award in the trial court and moved for its attorneys’ fees generated in seeking confirmation.  The trial court confirmed the arbitration award.

The Court of Appeals affirmed the trial court’s confirmation of the arbitration award.  The Court, applying Arizona’s Revised Uniform Arbitration Act (“RUAA”), which requires a trial court to confirm an award unless a statutorily enumerated ground to modify, correct, or vacate the award is implicated, held the trial court was presented with no reason to vacate the arbitration award.  Particularly, the Court rejected the client’s contention that the arbitration award was non-binding.  It noted the term “arbitration” in Arizona plainly refers to binding dispute resolution, whereas the term “mediation” unambiguously refers to non-binding dispute resolution.  The Court reasoned, had the contract intended to provide for non-binding dispute resolution, it would not have used the word arbitration, or the contract would have specifically stated that the process would be non-binding.  Moreover, the Court held that a party’s participation in an arbitration proceeding without objection waives the right to challenge an arbitration award.

Judge Paton authored the opinion; Judge McMurdie and Chief Judge Cattani joined.

Posted by: BriAnne Illich Meeds