457 S.W.3d 265
Ark.2015Background
- Entergy (owner) and Siemens (prime contractor) entered an Alliance Agreement with an arbitration clause for disputes "arising out of or relating to" that Agreement; AAA Commercial Rules were incorporated.
- Siemens contracted with Bigge (subcontractor) under a Master Services Agreement and a purchase order to remove a stator at Entergy’s Arkansas Nuclear One facility.
- In March 2013 Bigge’s gantry crane collapsed during the stator removal, causing death, injuries, and property damage.
- Entergy sued Bigge in state court for negligence, gross negligence, and willful and wanton conduct. Bigge moved to compel arbitration relying solely on the Alliance Agreement between Entergy and Siemens, asserting third-party-beneficiary and equitable-estoppel theories.
- The circuit court denied the motion, finding (among other things) that (1) arbitrability as to a nonsignatory was for the court to decide, (2) Bigge was not a third-party beneficiary, and (3) Entergy was not equitably estopped from litigating. Bigge appealed.
Issues
| Issue | Plaintiff's Argument (Bigge) | Defendant's Argument (Entergy) | Held |
|---|---|---|---|
| Who decides arbitrability when a nonsignatory seeks to enforce a signatory’s arbitration clause | Arbitration clause (incorporating AAA rules) clearly and unmistakably delegates arbitrability to an arbitrator | No clear and unmistakable delegation to allow a nonsignatory to force arbitrability before an arbitrator; courts decide | Court: Judicial determination; no clear-and-unmistakable evidence that Entergy and Bigge agreed to arbitrate arbitrability |
| Can a nonsignatory subcontractor (Bigge) enforce arbitration as a third-party beneficiary of the Alliance Agreement | Bigge contends the Alliance Agreement was intended to benefit subcontractors (e.g., limitations/exclusions of consequential damages), so it may invoke arbitration | Alliance Agreement shows no clear intent to benefit Bigge; subcontractors are generally incidental beneficiaries | Court: Bigge is not an intended third-party beneficiary; cannot invoke arbitration on that basis |
| Can equitable estoppel require Entergy to arbitrate tort claims against a nonsignatory | Bigge argues Entergy relied on the Alliance Agreement and should be estopped from avoiding its arbitration clause | Entergy’s tort claims arise independently of the contract; Entergy hasn’t relied on the Agreement to assert claims against Bigge | Court: No equitable estoppel; Entergy did not rely on the contract to assert these tort claims |
| Waiver of arbitration defense raised by Entergy | (Not reached on merits by court because Bigge had no arbitration right) | Entergy argued Bigge litigated matters in multiple fora and engaged in conduct amounting to waiver | Court: Declined to reach waiver because Bigge lacked the right to invoke arbitration |
Key Cases Cited
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (question of arbitrability is for courts unless parties clearly and unmistakably delegate it to arbitrators)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (nonsignatories may enforce arbitration clauses under traditional state-law contract principles)
- Contec Corp. v. Remote Solution, Inc., 398 F.3d 205 (2d Cir. 2005) (circumstances may permit a nonsignatory to compel arbitration when it is essentially equivalent to a signatory)
- American Ins. Co. v. Cazort, 316 Ark. 314 (1994) (signatory cannot rely on contract when advantageous and avoid arbitration when disadvantageous; estoppel may apply)
- Republic of Iraq v. ABB AG, 769 F. Supp. 2d 605 (S.D.N.Y. 2011) (party-to-nonparty arbitrability usually a question for courts; arbitration clause governing signatories does not automatically bind nonsignatories)