Halliburton Company v. KBR, Inc.
446 S.W.3d 551
Tex. App.2014Background
- Halliburton and KBR dispute over pre-spinoff tax liabilities and Halliburton’s TSA reimbursement claim.
- Two arbitration provisions apply: TSA (Accounting Referee) and MSA (AAA panel arbitrability).
- MSA arbitrability provision expressly vests arbitrability questions with the AAA Panel; TSA silent on arbitrability.
- Trial court denied TSA arbitration and granted MSA arbitration; arbitration proceeded under MSA.
- Halliburton sought to compel TSA arbitration and stay MSA proceedings; KBR cross-moved to compel under MSA.
- Court holds FAA jurisdiction to review; concludes AAA Panel was proper forum to determine arbitrability within integrated contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who may decide arbitrability—AAA Panel or court? | Halliburton: TSA silent; MSA governs arbitrability; court must decide. | KBR: AAA Panel can decide arbitrability per MSA. | AAA Panel authorized to determine arbitrability within integrated contracts. |
| Which agreement governs the dispute as to TSA claims? | TSA controls; all TSA issues must be arbitrated under TSA. | MSA governs disposition; AAA decides applicability between TSA and MSA. | AAA determined whether TSA or MSA governs the disputed claims; trial court compliant. |
| Is TSA process arbitration or expert determination? | TSA arbitration; damages and calculations resolved by Accounting Referee are arbitration. | Accounting Referee is expert-determinant; not arbitration under FAA. | Accounting Referee under TSA constitutes arbitration in substance. |
| Is the appealable order under FAA Section 16? | Order denying TSA arbitration is appealable as interlocutory under FAA. | Conflicting views; some orders not appealable. | Order is appealable under FAA §16(a)(1)(B); not dismissed. |
Key Cases Cited
- Schlumberger Technology Corp. v. Baker Hughes Inc., 355 S.W.3d 791 (Tex. App.—Houston [1st Dist.] 2011) (interlocutory appeal proper when order denies arbitration rights among competing agreements)
- CMH Homes v. Perez, 340 S.W.3d 444 (Tex. 2011) (FAA-based interlocutory appeal if permitted under federal law)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (gateway arbitrability questions reserved for court absent agreement)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (defines questions of arbitrability; court/arbitrator boundary)
- Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001) (finality and interlocutory appeal standards)
- Fit Tech, Inc. v. Bally Total Fitness Holding Corp., 374 F.3d 1 (1st Cir. 2004) (accountant remedy treated as arbitration under four-prong test)
- Martin Marietta Materials, Inc. v. Vulcan Materials Co., 56 A.3d 1072 (Del. Ch. 2012) (integrated contract doctrine; read related agreements together)
- In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) (appropriate scope for arbitration determinations)
- KBR, Inc. v. Halliburton Co., not provided (2014) (Texas First District Court of Appeals decision under review)