Present: All the Justices 

WATERFRONT MARINE CONSTRUCTION, INC. 

v. Record No. 951218 OPINION BY JUSTICE ELIZABETH B. LACY 

 April 19, 1996 

NORTH END 49ERS SANDBRIDGE BULKHEAD 

GROUPS A, B AND C 

 FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 

Thomas S. Shadrick, Judge 

 In this appeal we consider whether the trial court's 

confirmation of an arbitration award was erroneous because the 

claims in the demand for arbitration either were not arbitrable 

or were barred by the doctrine of res judicata. 

 North End 49ers Sandbridge Bulkhead Groups A, B, and C 

(49ers) is an unincorporated association of 22 landowners in 

the Sandbridge section of Virginia Beach. In 1988, the 49ers 

sought bids for the construction of a bulkhead along their 

property. Waterfront Marine Construction, Inc. (WMC) presented 

a bid to construct sheet steel bulkheads with tiebacks rather 

than the wooden bulkheads previously used in the Sandbridge 

area. The 49ers accepted WMC's bid and entered into an 

agreement with WMC for the construction of the bulkhead at a 

price of $850,740.00.1

 The construction contract included a 

provision providing for arbitration of any controversy or claim 

"arising out of or relating to the Contract or the breach 

thereof." 

 In 1989, the 49ers hired an engineering firm to inspect 

the bulkhead WMC had installed after a bulkhead of similar 

 

 1 The agreement was contained in three separate contracts 

which were identical in content but executed separately by the 

landowners in Group A, B, or C respectively. For purposes of 

this appeal, the three contracts are considered as a single 

contract. 
design had failed during a storm. At that point, the 49ers' 

bulkhead had not been completely backfilled. The inspection 

report concluded that the bulkhead design and construction were 

defective. Following the receipt of this report, the 49ers 

filed a demand for arbitration with the American Arbitration 

Association (AAA). The 49ers sought damages of $1,212,282.00, 

based on bids they received for work they contended was 

necessary to correct deficiencies in the bulkhead. WMC also 

filed a demand with the AAA seeking to recover $127,382.44 -- 

the unpaid balance of the construction price, plus interest and 

arbitration costs. 

 An arbitration panel comprised of three engineers was 

appointed by the AAA. Following a hearing, the panel entered 

an award on March 7, 1991, denying the 49ers' claim and 

granting WMC's claim. The arbitrators also ordered WMC to 

perform certain work relating to the tie rod connections and 

anchor piles within 60 days. According to the terms of the 

award, the work had to be performed to the satisfaction of an 

independent engineer jointly hired and paid by the 49ers and 

WMC. The award required WMC to guarantee the work done for one 

year from the date the independent engineer determined that the 

work was completed. 

 Despite numerous attempts, WMC and the 49ers could not 

agree on the independent engineer and, consequently, WMC did 

not perform the work required under the first arbitration 

award. During this time, the spring and summer of 1991, the 

parties engaged in settlement discussions. On October 31, 

1991, an unusually strong northeaster hit the 49ers' property, 
but the bulkhead did not collapse. A second storm hit five 

days later, damaging approximately 600 feet of the 2,340-foot 

bulkhead. 

 On January 16, 1992, the 49ers filed a second demand for 

arbitration with the AAA, characterizing it as "a continuation" 

of the previous arbitration case, and requesting that the same 

panel be assembled to hear the demand. They also sought 

punitive damages. The AAA determined, however, that the matter 

was "filed as a new matter" and that reconvening the members of 

the original arbitration panel required agreement of the 

parties. The AAA also noted that WMC had raised an issue of 

"arbitrability" and stated "[a]s a nonjudicial body, the 

Association cannot determine whether or not an issue is 

arbitrable. Therefore, we will proceed with further 

administration of this case, unless otherwise requested by both 

parties, or unless the moving party is stayed by court order." 

 WMC filed a motion in the trial court seeking a temporary 

injunction to stay the pending arbitration proceeding. In its 

pleadings, WMC also sought a declaratory judgment that the 

49ers' second arbitration demand was barred by collateral 

estoppel and res judicata. The trial court entered an ex parte

order on September 4, 1992, enjoining the arbitration 

proceedings. Following a hearing on March 18, 1993, the trial 

court ruled from the bench that the first arbitration award was 

final, that it could be "recognized in the form of a judgment," 

and that it could be enforced. The court found that there was 

no agreement to "arbitrate the arbitration award." 

 The 49ers filed a motion to reconsider and, after further 
consideration of memoranda and argument of counsel, the trial 

court reversed its prior position and vacated its September 4 

order enjoining further arbitration proceedings. The court 

entered an order on September 30, 1993, referring the following 

matters to arbitration: 1) whether the dispute involving the 

first arbitration award was arbitrable; 2) whether res judicata

was applicable to the claim; and 3) whether the 49ers were 

entitled to punitive damages. 

 The arbitration panel determined that the dispute 

centering on enforcement of the first arbitration award was 

arbitrable. After a two-day hearing, the panel issued a second 

arbitration award on July 8, 1994. That award required the 

49ers to pay WMC the balance due from the first arbitration 

award and required WMC to pay a total of $491,795.00 to the 

49ers for repair and replacement of the bulkhead and tie-back 

system, pre-arbitration costs, and property damage. 

 Pursuant to Code § 8.01-581.09, the 49ers filed a motion 

in the trial court to confirm the second arbitration award. 

WMC filed a motion seeking to vacate the award pursuant to Code 

§ 8.01-581.10 based on allegations, inter alia, that the 

arbitrators exceeded their authority by addressing issues that 

should have been resolved by the court and resolving issues 

that were not arbitrable. WMC also sought a modification of 

the award pursuant to Code § 8.01-581.011. After considering 

memoranda and argument of counsel, the trial court entered an 

order on March 30, 1995, denying WMC's motion to vacate, 

granting WMC's motion to modify by removing approximately 

$17,000 in pre-arbitration costs from the amount owed to the 
49ers, and confirming the award as modified. We awarded WMC an 

appeal. 

 WMC raises a number of issues in its challenge to the 

trial court's action confirming the second arbitration award. 

These issues include whether the trial court's reference of the 

second demand for arbitration to the arbitration panel was 

erroneous because the claims in the demand either were not 

arbitrable or were barred by the doctrine of res judicata, 

whether the trial court used the proper standard of review in 

confirming the second arbitration award, and whether compulsory 

arbitration is available to current members of the 49ers who 

were not signatories to the 1988 contract which contained the 

arbitration agreement. We begin by considering a threshold 

issue raised by WMC: whether the trial court erred in its 

determination that the arbitration panel should decide the 

arbitrability of the claims contained in the 49ers' second 

demand for arbitration. 

I. DECIDING ARBITRABILITY 

 WMC argues that the court, not the arbitrators, should 

determine whether a dispute is arbitrable. Therefore, it 

contends, the trial court erred when it referred to the 

arbitration panel the issue whether the compliance dispute was 

arbitrable. The 49ers maintain that Code § 8.01-581.02(B) 

restricts the trial court's role to considering only whether 

there is an agreement to arbitrate and that, in the absence of 

a specific agreement to the contrary, the arbitrators have the 

authority to resolve the issue of arbitrability. Because the 

existence of an arbitration agreement is not contested here, 
the 49ers conclude that the trial court properly referred the 

issue whether a dispute over the enforcement of the first award 

was arbitrable to the arbitration panel for resolution. 

A. THE STATUTE 

 Contrary to the 49ers' assertion, Code § 8.01-581.02(B) 

authorizes the court to determine issues of arbitrability. 

That subsection provides in pertinent part: 

 On application, the court may stay an arbitration 

proceeding commenced or threatened on a showing that 

there is no agreement to arbitrate. Such an issue, 

when in substantial and bona fide dispute, shall be 

forthwith and summarily tried and the stay ordered if 

found for the moving party. 

(Emphasis added). The 49ers contend that the phrase "agreement 

to arbitrate" in the subsection means that once a party shows 

that there is a valid contract between the parties and that the 

contract provides for arbitration of disputes, the court must 

order arbitration, leaving to the arbitrators issues of 

specific claim arbitrability. The statute, however, has not 

been applied to limit the trial court's authority in the manner 

suggested. 

 In two recent cases subject to the Uniform Arbitration 

Act, Code §§ 8.01-581.01 through -581.016, we have recognized 

the power of trial courts to resolve issues of arbitrability. 

In Trustees v. Taylor & Parrish, 249 Va. 144, 452 S.E.2d 847 

(1995), the trial court ruled that the arbitration clause in 

the parties' contract encompassed a dispute over a change order 

and that the issues in an amended demand for arbitration were 

arbitrable. Id. at 148-49, 452 S.E.2d at 849-50. Likewise, in 

McMullin v. Union Land & Management Co., 242 Va. 337, 410 

S.E.2d 636 (1991), the trial court ruled that a disputed claim 
for compensation was outside the scope of the arbitration 

clause. Id. at 341, 410 S.E.2d at 638. While this Court 

reversed the trial courts' conclusions, the reversals were not 

based on the trial courts' lack of jurisdiction to decide the 

arbitrability issues. Rather, in those cases, the trial courts 

erred in their conclusions regarding arbitrability. Trustees, 

249 Va. at 155, 452 S.E.2d at 853; McMullin, 242 Va. at 342, 

410 S.E.2d at 639. Thus, we state explicitly what was implicit 

in those cases: Code § 8.01-581.02(B) authorizes the court to 

determine whether there is an agreement to arbitrate the 

specific controversy before the court, that is, to decide 

questions of arbitrability. 

 Although the trial court is authorized by statute to 

resolve issues of arbitrability, the parties by their contract 

can agree that those issues be decided by the arbitrator. 

Thus, we must look to the parties' contract to see if such an 

agreement exists in the present case. 

B. THE CONTRACT 

 The arbitration provision in the parties' contract in this 

case does not address the specific issue of who--the court or 

the arbitrator--shall determine arbitrability. In Doyle & 

Russell, Inc. v. Roanoke Hospital Ass'n, 213 Va. 489, 193 

S.E.2d 662 (1973), we concluded that "it is the province of the 

courts to determine the threshold question of arbitrability, 

given the terms of the contract between the parties." Id. at 

494, 193 S.E.2d at 666. See also United Paperworkers v. Chase 

Bag Co., 222 Va. 324, 327 n.1, 281 S.E.2d 807, 809 n.1 (1981). 

 We have also held that an arbitration clause which encompasses 
all controversies "arising out of" or "related to" the contract 

is very broad in its coverage. McMullin, 242 Va. at 341, 410 

S.E.2d at 639. This case, however, presents an issue of first 

impression: whether the absence of specific language 

addressing who decides arbitrability reflects the parties' 

intent to include or exclude arbitrability determinations from 

the arbitrator's authority. 

 The 49ers assert that the general policy favoring 

arbitration reflected in AT&T Technologies v. Communications 

Workers of America, 475 U.S. 643, 650 (1986), and Moses H. Cone 

Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 

24-25 (1983), supports the conclusion that, in the absence of 

any clear expression in an arbitration agreement to the 

contrary, the issue of arbitrability is itself arbitrable and 

to be resolved by the arbitrators. 

 In a recent case concerning the application of the Federal 

Arbitration Act, 9 U.S.C. §§ 1 through 14 (1982), however, the 

United States Supreme Court held that in deciding who 

determines questions of arbitrability, contractual silence or 

ambiguity is considered insufficient to give that authority to 

the arbitrators. First Options of Chicago, Inc. v. Kaplan, ___ 

U.S. ___, ___, 115 S.Ct. 1920, 1924-25 (1995). As the Supreme 

Court pointed out, when entering into an agreement to 

arbitrate, the parties surrender the right to have a court 

determine the merits of a controversy. Id. at ___, 115 S.Ct. 

at 1923. Although a court may review the arbitration award 

when confirmation, modification, or vacation is sought, the 

grounds for such relief are limited and do not include the 
merits of the award itself. Thus, whether the court or the 

arbitrator decides the question of arbitrability of a dispute 

"makes a critical difference" to the parties. Id. 

Furthermore, the Supreme Court observed that the parties to the 

contract "likely gave at least some thought to the scope of 

arbitration," id. at 1924, but may not have focused on either 

the "rather arcane" question of who would make that decision or 

the "significance of having arbitrators decide the scope of 

their own powers," id. at 1925. In light of these 

considerations, and because parties cannot be compelled to 

arbitrate those issues which they did not agree to submit to 

arbitration, the Supreme Court concluded that, in the absence 

of a clear agreement, parties should not be forced to submit 

matters to arbitration which they may have contemplated would 

be decided by a court. Id.

 We agree with the Supreme Court's rationale and conclusion 

in this regard. Furthermore, it is consistent with the 

principle enunciated in Doyle & Russell that a party "cannot be 

compelled to arbitrate a question which, under his agreement is 

not arbitrable." 213 Va. at 494, 193 S.E.2d at 666. Thus we 

hold that, in the absence of a clear agreement showing that the 

parties intended that the arbitrator decide questions of 

arbitrability, that question is to be resolved by the court. 

Accordingly, the trial court erred in declining to resolve the 

controversy relating to the arbitrability of the 49ers' second 

arbitration demand and in referring that matter to the 

arbitration panel for resolution.2

 

 2 Relying on statements made by the trial court at the May 

7, 1993 hearing and in the letter opinion of the court 
 Although the trial court erred, WMC suggests that this 

Court need not remand the case to the trial court to make a 

determination on arbitrability. Rather, it contends, and we 

agree, that we can determine this issue on the record before 

us. Both parties agree that the issue was briefed and argued 

before the trial court and the arbitration panel. The record 

before us includes all necessary arbitration and trial court 

proceedings. The issue has also been fully briefed in this 

appeal. Accordingly, we will proceed to determine whether the 

claims contained in the 49ers' second demand for arbitration 

are arbitrable. 

II. THE SECOND ARBITRATION DEMAND 

 In their second demand for arbitration, the 49ers 

described the nature of the dispute as follows: 

 Cost of repair necessary to bring the bulkhead 

to the condition demanded by the arbitrators in its 

Award dated February 12, 1991. 

 Respondent performed none of the work, nor 

supplied the Bond required by the Arbitrators . . . 

 On November 11, 1991, sections of the bulkhead 

collapsed. 

 Failure to perform is breach of the contract 

containing an arbitration clause, breach of 

contractual warranty and breach of the guarantee in 

the Award. 

 

referring to that hearing, the 49ers maintain that the trial 

court did decide the issue of arbitrability. However, a court 

speaks through its orders and we presume that the orders 

accurately reflect what transpired. Stamper v. Commonwealth, 

220 Va. 260, 280-81, 257 S.E.2d 808, 822 (1979), cert. denied, 

445 U.S. 972 (1980). The order of the trial court entered on 

September 20, 1993, specifically stated that "the issue of a 

failure to comply with the arbitration award is a matter for 

the arbitrators who will determine the arbitrability of that 

issue." Moreover, in submitting language to the court for 

inclusion in its order, WMC was not "inviting error" as the 

49ers assert. WMC only sought to have the trial court's ruling 

accurately portrayed in the order. The trial court 

subsequently chose this language as its holding. 
The 49ers sought to recover the cost of repair "to bring the 

structure in compliance" with the previous arbitration award, 

the cost of emergency repair, property damage, and attorneys' 

fees. Elaborating on their demand, the 49ers claim that WMC 

breached Paragraph 3.5.1 of the construction contract which 

contains the contractor's warranties against defective 

construction and design of the bulkhead. The 49ers also claim 

that WMC's failure to comply with the first arbitration award 

breached the guarantee contained in the award and was "in and 

of itself, a breach of the Contract, which required the parties 

to submit their disputes to arbitration." We begin with the 

consideration of the 49ers' claims regarding the breach of the 

first arbitration award based on WMC's failure to comply with 

its terms. 

A. FAILURE TO COMPLY 

 Although the parties could have agreed that disputes over 

the compliance with a final arbitration award would be subject 

to arbitration, the contract does not expressly address the 

arbitrability of such controversies. See Menorah Ins. Co. v. 

INX Reinsurance Corp., 72 F.3d 218, 222 (1st Cir. 1995). 

Nevertheless, the contract does describe certain attributes of 

the award itself. According to the terms of the contract, the 

parties agreed that the award was to be "final," and that 

judgment "may be entered" on the award by a court. By allowing 

a judgment to be entered on the award, it is reasonable to 

assume that the parties were aware of the statutory provisions 

regarding court confirmation of the award, Code § 8.01-581.09, 

and providing that the court's order confirming the award can 
be enforced as "any other judgment or decree," Code § 8.01-

581.012.3 Additionally, the parties presumably knew that an 

arbitrator has no power to enforce the award rendered. The 

statute provides a limited time within which the parties may 

ask the arbitrator to reconsider or modify the award. Code 

§ 8.01-581.08. After that time, the arbitrator has no further 

authority over the award and, in absence of agreement of the 

parties, the arbitrator becomes functus officio. Home Oil Co. 

of Hot Springs, Virginia v. Home Oil Co., 240 Va. 5, 8-9, 393 

S.E.2d 188, 189-90 (1990). 

 We do not dispute the 49ers' assertion that ambiguity in 

the scope of an arbitrability clause should be resolved in 

favor of arbitrating the claim. Considering the above factors, 

however, we conclude that the contract reflects the parties' 

understanding that the arbitration process would end with the 

arbitration award. Any further consideration of the award or 

action regarding compliance with it would be undertaken in a 

different forum. 

 The 49ers also argue that the failure to comply with the 

first arbitration award is a breach of the construction 

contract because the parties agreed that an arbitration award 

would be binding. We reject this argument. We agree that the 

purpose of compulsory arbitration is that, in lieu of taking 

the matter to court, the parties will accept the arbitrators' 

award as a final resolution of the controversy. That 

understanding, however, does not anticipate that the only 

 

 3 While the first arbitration award at issue here was not 

confirmed by a court, that fact is irrelevant to the parties' 

intent at the time the contract was executed. 
action a party may take is to comply with the award. The Act 

clearly contemplates that a party who disagrees with an award 

can file a pleading with a court to have it vacated or 

modified, albeit that the grounds for doing so are limited. 

Under the 49ers' reasoning, such a pleading would be a breach 

of the contract because by it the parties would be seeking to 

escape a binding award. 

 We also reject the 49ers' assertion that we should 

interpret the clause, "claim or controversy arising out of or 

related to" broadly as we did in McMullin, and hold that the 

noncompliance with the award qualifies as a "claim or 

controversy" under the contract in this case. We do not 

retreat from our prior statements that an arbitration clause 

like the one in issue here is very broad; however, such clauses 

are not unlimited. In McMullin, we determined that the 

controversy proposed for arbitration was "related to" the 

agreement, and therefore arbitrable, because the litigants had 

to refer to a provision of the contract to resolve the 

controversy. 242 Va. at 342, 410 S.E.2d at 639. 

McMullin, however, is distinguishable from the instant 

case. Here, the controversy regarding WMC's noncompliance 

relates solely to the terms of the first arbitration award; no 

provision of the construction contract need be construed or 

applied to resolve the controversy over noncompliance. Thus, 

we decline to adopt the construction of the phrase "arising out 

of or related to" urged by the 49ers because such a 

construction is far broader than any we have previously applied 

to the clause. 
 The 49ers' claim in their second demand for arbitration, 

based on WMC's failure to comply with the terms of the first 

arbitration award, is nothing more than an action seeking 

compliance with the first arbitration award and damages for the 

failure to comply with that award. We conclude that such an 

action was not contemplated as an arbitrable controversy in the 

agreement between the parties. 

B. BREACH OF WARRANTY 

 In their second demand for arbitration, the 49ers also 

claim that WMC breached the warranties contained in Paragraph 

3.5.1 of the contract. In that provision, the contractor 

warrants that the material and equipment furnished will be of 

good quality, that the work will be free from defects, and that 

the work will conform to the requirements of the contract 

documents. WMC does not dispute the arbitrability of this 

claim; however, WMC asserts that further arbitration of this 

claim is barred by the principle of res judicata because the 

49ers made the same claim in their first demand for arbitration 

which was denied by the arbitrators. 

Res judicata is a judicially developed doctrine designed 

to end litigation and to protect the litigants from harassment. 

 A plea of res judicata will be sustained if the prior 

adjudication was between the same parties or their privies and 

a valid final judgment was entered which resolved the claim on 

its merits. Bates v. Devers, 214 Va. 667, 670-71, 202 S.E.2d 

917, 920-21 (1974). When parties choose to resolve their 

disputes by arbitration rather than litigation, even though the 

resolution reached in that process does not require the 
application of legal principles, courts have applied the 

doctrine of res judicata to preclude subsequent litigation on 

issues resolved by validly issued arbitration awards. 1 

Gabriel M. Wilner, Domke on Commercial Arbitration § 31:02, at 

452-53 (1984 & Supp. 1995); Restatement (Second) of Judgments 

§ 84 cmt. b (1982). 

 While we have not specifically addressed the applicability 

of the doctrine of res judicata to an arbitration award, this 

Court reviewed a trial court's dismissal of a garnishment 

action based on the res judicata bar of a confirmed arbitration 

award in Virginia Builders' Supply v. Brooks & Co., 250 Va. 

209, 212, 462 S.E.2d 85, 87 (1995). On appeal, this Court 

reversed, not because res judicata did not attach to such 

awards, but because the parties to the arbitration agreement 

and award were not the same parties in the garnishment 

proceeding and, therefore, the elements of res judicata were 

not satisfied. Id. at 213-14, 462 S.E.2d at 88. 

 The lack of any challenge to the trial court's ability to 

bar subsequent litigation by applying the doctrine of res 

judicata based on a prior confirmed arbitration award is 

readily understandable. Code § 8.01-581.012 provides that a 

judgment confirming an arbitration award is to be treated like 

any other judgment. Such treatment would include the 

application of res judicata. 

 While res judicata may operate to bar subsequent judicial 

proceedings based on a prior confirmed arbitration award, here 

WMC seeks to bar a subsequent arbitration proceeding based on 

the res judicata effect of an unconfirmed arbitration award. 
These factual differences do not preclude application of the 

res judicata plea in this case, however. The parties have made 

no distinction between a confirmed and unconfirmed award. 

Therefore, we will assume, without deciding, that an 

unconfirmed arbitration award is treated in the same manner as 

a confirmed award for purposes of res judicata analysis.4 

 The parties also do not contest the power of res judicata

to bar a subsequent arbitration proceeding. The 49ers, 

however, maintain that, in the absence of a specific agreement 

to the contrary, whether a prior award is given res judicata

effect on a subsequent request for arbitration is itself 

arbitrable, and therefore, the trial court was correct in 

referring this issue to the arbitration panel. 

1. Arbitrability of Res Judicata Plea 

 The 49ers rely heavily on a labor arbitration case, Little 

 

 4 A number of jurisdictions apparently do not distinguish 

between confirmed and unconfirmed awards for purposes of res 

judicata. See, e.g., Wellons, Inc. v. T.E. Ibberson Co., 869 

F.2d 1166, 1169 (8th Cir. 1989); Behrens v. Skelly, 173 F.2d 

715, 720 (3rd Cir.), cert. denied, 338 U.S. 821 (1949); In re 

Drexel Burnham Lambert Group, Inc. v. DBL Liquidating Trust, 

161 B.R. 902, 907 (Bankr. S.D.N.Y. 1993); Monmouth Pub. Sch. v. 

Pullen, 489 N.E.2d 1100, 1105 (Ill. App. Ct. 1985); Hurley v. 

Fox, 587 So. 2d 1, 2 (La. Ct. App. 1991); Protocom Devices, 

Inc. v. Figueroa, 545 N.Y.S.2d 527, 528 (N.Y. Sup. Ct. 1989), 

aff'd, 569 N.Y.S.2d 80 (N.Y. App. Div. 1991). But see Gruntal 

& Co. v. Steinberg, 854 F. Supp. 324, 337-38 (D.N.J.) 

(unconfirmed arbitration award under Maryland statute has no 

preclusive effect), aff'd, 46 F.3d 1116 (3d Cir. 1994); Larsen 

v. Farmers Ins. Co., 909 P.2d 935, 940 (Wash. Ct. App. 1996) 

(unconfirmed arbitration award under Oregon law not equivalent 

to final judgment for collateral estoppel purposes). Even 

though the applicable statutes specifically provide that an 

arbitration award is only a separate contract between the 

parties until confirmed, at least two courts have afforded an 

unconfirmed award res judicata effect in a subsequent action. 

Pollock v. Marx, 171 B.R. 218, 221-23 (Bankr. N.D. Tex. 1994); 

Thibodeau v. Crum, 6 Cal. Rptr.2d 27, 33-34 (Cal. Ct. App. 

1992). 
Six Corp. v. United Mine Workers of America, 701 F.2d 26, 29 

(4th Cir. 1983), for their contention that the applicability of 

res judicata to a particular award is an arbitrable issue.5 

Our review indicates, however, that other jurisdictions have 

concluded that a plea of res judicata is not subject to 

arbitration and the court, not the arbitration panel, 

determines whether a previous arbitration award operates as res 

judicata or collateral estoppel on a subsequent action or 

demand for arbitration. See, e.g., Clark v. Bear Stearns & 

Co., 966 F.2d 1318, 1321 (9th Cir. 1992); Greenblatt v. Drexel 

Burnham Lambert, Inc., 763 F.2d 1352, 1360-61 (11th Cir. 1985); 

Monmouth Pub. Sch. v. Pullen, 489 N.E.2d 1100, 1105 (Ill. App. 

Ct. 1985); Chattin v. Cape May Greene, Inc., 524 A.2d 841, 848 

(N.J. Sup. Ct. App. Div.), cert. denied, 526 A.2d 209 (N.J. 

1987); Rembrandt Indus., Inc. v. Hodges Int'l, Inc., 344 N.E.2d 

383, 384 (N.Y. 1976); C & O Dev. Co. v. American Arbitration 

Ass'n, 269 S.E.2d 685, 687 (N.C. App. Ct. 1980), review denied, 

274 S.E.2d 227 (N.C. 1981). We believe these jurisdictions 

reached the correct conclusion. 

 First we note that arbitration is proper in this case only 

for controversies "arising from" or "relating to" the contract 

between the parties. The dispute over WMC's plea of res 

judicata arises from, or is related to, satisfying the elements 

of this common law doctrine; it does not arise from the terms 

 

 5Hotel Ass'n of Washington, D.C. v. Hotel & Restaurant 

Employees Union, 963 F.2d 388 (D.C. Cir. 1992), also relied on 

by the 49ers, did not involve the preclusive effect of a prior 

 labor arbitration award on a subsequent arbitration but 

involved whether the decision rendered in the first arbitration 

was binding on a second arbitration involving a different 

employee. Id. at 389. 
of the contract. Thus, it is not arbitrable. 

 More importantly, an arbitration panel is not generally 

bound by legal principles, does not have to explain or justify 

its decision, and the decision is not reviewed for legal 

errors. Rather, the arbitrators are entitled to make their 

decision based on what they deem to be just and equitable 

within the scope of the parties' agreement. AAA Construction 

Industry Arbitration Rule 43 (1993); G. Richard Shell, Res 

Judicata and Collateral Estoppel Effects of Commercial 

Arbitration, 35 UCLA L. Rev. 623, 633-37 (1988). Consequently, 

when considering a plea of res judicata, an arbitration panel 

could determine that the issues resolved in a prior arbitration 

should be revisited, regardless of whether the legal elements 

required for sustaining the plea were met. Allowing a plea of 

res judicata to be resolved by arbitration defeats the purpose 

of the judicially created doctrine -- to bring an end to the 

substantive controversy and to protect the parties from relitigating previously decided matters. 

 Accordingly, we conclude that, in the absence of a clear 

agreement to the contrary, a plea of res judicata is not 

arbitrable. Therefore, the trial court erred in directing the 

arbitration panel to determine whether res judicata barred 

WMC's claim for breach of contractual warranty. However, we 

will not remand this issue for determination by the trial court 

because, like the issue of arbitrability discussed above, the 

record before us is sufficient to resolve the issue here. 

2. Application of Res Judicata to 

Breach of Warranty Claim 

 The original arbitration demand filed by the 49ers 
described the dispute as a breach of contract. The alleged 

breach, as explained by the 49ers' arbitration counsel, 

consisted of specific design and construction defects. 

 The 49ers assert that the second demand claiming breach of 

warranty as a result of the damaged bulkhead was not identical 

to the first, and could not have been, because the bulkhead had 

not failed at the time of the first demand. Relying on Allstar 

Towing, Inc. v. City of Alexandria, 231 Va. 421, 344 S.E.2d 903 

(1986), the 49ers argue that, for res judicata purposes, a 

cause of action is "an assertion of particular legal rights 

which have arisen out of a definable factual transaction." Id.

at 425, 344 S.E.2d at 906. Thus, they assert, since the event 

giving rise to the cause of action, i.e., the partial collapse 

of the bulkhead, had not occurred at the time of the first 

arbitration, the claims could not have been the same. 

 The 49ers misapply Allstar Towing. In that case the city 

of Alexandria rejected the towing company's initial bid to 

provide services because the company was not a registered 

corporation and, therefore, was ineligible for award of the 

contract. The company unsuccessfully challenged that decision. 

Id. at 422-23, 344 S.E.2d at 904-05. 

 Thereafter, the company submitted a bid in response to the 

city's second invitation to bid. The city awarded the contract 

to another towing enterprise. The company filed a second 

protest asserting that it met the bid requirements, but the 

company receiving the contract did not. The Court in Allstar 

Towing held that the company's second action was not subject to 

a res judicata bar because the legal rights asserted by the 
company arose from the second transaction. The second action 

was not related to the first transaction in which the company's 

bid was rejected because it was an unresponsive bidder. Id.

 In this case, the legal rights asserted by the 49ers in 

the first arbitration action were based on its contractual 

right to construction of a bulkhead free of design or 

construction defects. The storm damage to the bulkhead after 

the first arbitration did not increase or alter the contractual 

rights the 49ers acquired at the time the contract was 

executed. Furthermore, no plans were altered and no work was 

performed on the bulkhead between the filing of the first and 

second demands for arbitration. The damages suffered as a 

result of the alleged defects may have increased when the 

bulkhead collapsed, but any defects in construction and design 

which existed at the time of the first arbitration had not 

changed at the time of the second demand for arbitration. 

 Furthermore, even though the first demand described only 

specific defects, the doctrine of res judicata applies to all 

claims which could have been brought, thereby preventing a 

party from splitting his cause of action. Flora, Flora & 

Montague, Inc. v. Saunders, 235 Va. 306, 310-11, 367 S.E.2d 

493, 495 (1988); Bates, 214 Va. at 670-71, 202 S.E.2d at 920-

21. Here, the 49ers had engaged an engineer to evaluate the 

bulkhead prior to filing its first demand for arbitration. 

Their engineer reported that the design and construction of the 

bulkhead was deficient. In the first arbitration, the 49ers 

chose to limit the items of alleged deficient construction and 

design. Having made that choice, they are not entitled to 
bring forward additional items at a later date, particularly 

when, as set out above, there had been no further construction 

or design activity on the bulkhead between the two arbitration 

demands. 

 The claim for breach of warranty asserted by the 49ers in 

their second arbitration demand was no different than the claim 

for breach of contract asserted in the first arbitration 

demand. Labeling the claim a breach of warranty rather than a 

breach of contract does not alter the nature of the claim. 

That label is a distinction without a difference. As pointed 

out by WMC, a breach of the warranty is a breach of the 

construction contract. Werner Sabo, Legal Guide to AIA 

Documents § 418, at 199 (3rd ed. 1989). 

 The record demonstrates that the first arbitration was 

between the 49ers and WMC, and, as a result of that proceeding, 

a valid final arbitration award was entered rejecting the 

49ers' claim for breach of contract due to defective design and 

construction of the bulkhead. Thus, we conclude that WMC met 

its burden of proof to sustain its plea of res judicata. The 

49ers' demand for arbitration of their breach of warranty claim 

is barred by the first arbitration award under principles of 

res judicata. 

III. CONCLUSION 

 In summary, the contract between the parties in this case 

did not specifically provide that questions of arbitrability 

and res judicata be submitted to arbitration. Therefore, the 

trial court erred in failing to resolve those issues and in 

referring them to the arbitration panel. Furthermore, the 
49ers' claims in their second demand for arbitration relating 

to noncompliance with the first arbitration award are not 

arbitrable and their claim for breach of warranty is barred by 

res judicata. Accordingly, we will reverse the judgment of the 

trial court confirming the second arbitration award and enter 

judgment in favor of WMC.6

 The judgment will be without 

prejudice to the parties' rights in connection with the first 

arbitration award. 

Reversed and final judgment.

 

 6 In light of this disposition, we need not address WMC's 

other assignments of error or the 49ers' assignment of crosserror.