Court Upholds Power of Arbitrator to Determine Location of Arbitration Proceeding
Alliance Investment Company, LLC v. Omni Construction Company, Inc., a/k/a OCC, Inc; and KPS, LLC, a/k/a KP Sourcing, LLC
Alliance Investment Company, LLC v. Omni Construction Company, Inc., a/k/a OCC, Inc; and KPS, LLC, a/k/a KP Sourcing, LLC,
KPS, LLC ("Kroger") entered into a contract ("the prime contract") with Omni Construction Company, Inc. ("Omni") in which Omni would build a grocery store for Kroger in Madison, Alabama. Omni subcontracted ("the subcontract") with Alliance Investment Company, LLC ("Alliance"), for concrete services to be performed on the construction project. After a dispute arose, Alliance filed suit in the circuit court and brought several claims against both Kroger and Omni. Kroger and Omni jointly filed a motion to stay the circuit court proceedings and to compel arbitration of Alliance’s claims, citing the arbitration provisions contained in both the prime contract and the subcontract. On August 28, 2017, the circuit court granted the motion and ordered the parties to arbitrate the case pursuant to the terms of the contracts.
Alliance filed a demand for arbitration with the American Arbitration Association ("the AAA") and argued that, pursuant to the contracts, the disputes were to be arbitrated in Alabama. Kroger and Omni argued that the claims were governed by a separate section of the arbitration provision in the subcontract which required disputes to be arbitrated in Cuyahoga County, Ohio. On January 22, 2018, the circuit court amended its order compelling arbitration and ordered the arbitration to be held in Ohio.
Alliance appealed the circuit court's order and argued that the circuit court lacked authority to order the parties to arbitrate in Ohio pursuant to the AAA’s Construction Industry Arbitration Rules. The Alabama Supreme Court noted that the controlling rule broadly grants the arbitrator the power to decide which provision controlled Alliance's claims. Thus, the Supreme Court found that the arbitrator held the power to determine whether the arbitration would be held in Alabama or Ohio. Thus, the Alabama Supreme Court reversed and remanded the case.