Opinion issued September 11, 2014

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-12-00949-CV

———————————

HALLIBURTON COMPANY, Appellant

V.

KBR, INC., Appellee

On Appeal from the 165th District Court

Harris County, Texas

Trial Court Case No. 2012-39503

O P I N I O N

This case involves the arbitration of a dispute in which Halliburton 

Company claims to have overpaid its share of tax liabilities related to a corporate 

separation from its wholly-owned subsidiary, KBR, Inc. The parties agree that the 

dispute must be arbitrated, but they disagree as to which of two separate arbitration 

agreements governs certain aspects of the dispute. In this interlocutory appeal, 
2

Halliburton presents two issues challenging the trial court’s order denying its 

application to compel KBR to arbitrate all aspects of the dispute before a single 

accounting referee, as provided in the parties’ Tax Sharing Agreement. 

Halliburton also presents a third issue responding to KBR’s motion to dismiss this 

appeal. 

We deny KBR’s motion to dismiss this appeal. We affirm the trial court’s 

order denying Halliburton’s application to compel arbitration. 

Background Summary

In 2007, Halliburton spun off its wholly-owned subsidiary KBR. Before the 

spinoff, all financial transactions between the companies were recorded in an 

intercompany account as items payable or receivable. At the end of 2004, the 

account reflected that KBR owed Halliburton $1.2 billion. In October 2005, 

Halliburton contributed approximately $300 million of the intercompany account 

balance to KBR’s equity in the form of a capital contribution and converted the 

remaining balance in the intercompany account into two long-term notes payable 

to Halliburton subsidiaries. 

Preceding the 2007 corporate separation, Halliburton and KBR signed a 

number of contracts, including the parties’ Master Service Agreement (“MSA”), 

entered into on November 20, 2006. It states, “[T]he parties intend to set forth in 

this Agreement, including . . . the Ancillary Agreements contemplated hereby, the 
3

principal arrangements between [Halliburton and KBR] regarding the separation of 

the KBR Group from the Halliburton Group, the IPO [initial public offering] and 

certain future transactions.” 

One of the Ancillary Agreements referenced in the MSA is the Tax Sharing 

Agreement (“TSA”), entered into on November 15, 2006 and amended on 

February 26, 2007. The TSA provides, “[T]he Parties wish to set forth the general 

principles under which they will allocate and share various Taxes . . . and related

liabilities” and further “to provide for the allocation between the Halliburton Group 

and the KBR Group of all responsibilities, liabilities and benefits relating to all 

Taxes paid or payable by either group” for the relevant taxable periods. 

The MSA and the TSA each contain agreements to arbitrate. Paragraph, 7.1, 

found in Article VII of the MSA, reads as follows: 

7.1 Agreement to Arbitrate. The procedures for discussion, 

negotiation and arbitration set forth in this Article VII shall be the 

final, binding and exclusive means to resolve, and shall apply to all 

disputes, controversies or claims (whether in contract, tort or 

otherwise) that may rise out of or relate to, or arise under or in 

connection with: (a) this Agreement and/or any Ancillary Agreement, 

(b) the transactions contemplated hereby or thereby, including all 

actions taken in furtherance of the transactions contemplated hereby 

or thereby on or prior to the date hereof, or (c) for a period of ten 

years after the IPO Closing Date, the commercial or economic 

relationship of the parties, in each case between or among any 

member of the Halliburton Group and the KBR Group. . . .

The arbitration article also provides that the arbitration will be conducted by 

a panel of three arbitrators from the American Arbitration Association (“AAA”). 
4

Paragraph 7.6(b) of the MSA provides that the AAA Panel has the authority to 

determine issues of arbitrability. It reads, 

The arbitrators shall have full power and authority to determine issues 

of arbitrability but shall otherwise be limited to interpreting or 

construing the applicable provisions of this Agreement, any Ancillary 

Agreement or any Prior Transfer Agreement, and will have no 

authority or power to limit, expand, alter, amend, modify, revoke or 

suspend any condition or provision of this Agreement, any Ancillary 

Agreement or any Prior Transfer Agreement . . . .

The TSA’s arbitration provision, found in Section 8.11, requires that “[a]ny 

disagreement between [KBR and Halliburton] with respect to any matter that is the 

subject of this Agreement, including, without limitation, any disagreement with 

respect to any calculation or other determinations by Halliburton 

hereunder . . . shall be resolved by a nationally recognized independent accounting 

firm chosen by and mutually acceptable to the Parties.” Under this provision, 

arbitration would be conducted by a single person from an accounting firm, known 

as an Accounting Referee. In contrast to the MSA, the TSA contains no provision 

addressing determinations of arbitrability. 

After the corporate separation, a dispute arose between the two companies 

regarding whether Halliburton had paid more than its required share of tax 

liabilities for certain years preceding the corporate spinoff. During each prespinoff year, Halliburton had filed a single, consolidated tax return for itself and its 
5

subsidiaries, including KBR. Even though a consolidated return was filed, the tax 

liabilities were allocated between the two companies. 

In 2011, Halliburton notified KBR that it had determined, pursuant to the 

TSA, that it had paid more than its share of tax liabilities for a number of preseparation years. Halliburton claimed that the amount of the overpayment was 

approximately $256 million. It sought reimbursement from KBR for that amount. 

KBR pointed out that Halliburton had paid the funds for its share of the tax 

liabilities into the intercompany account. It asserted that the account had been 

settled in anticipation of the corporate spinoff. KBR claimed that, contrary to 

Halliburton’s position, under the circumstances, there was no basis in the TSA for 

Halliburton to reopen the settled account or to reallocate and recalculate tax 

liabilities that were paid based on filed tax returns. 

Ultimately, the companies could not agree on a resolution of Halliburton’s 

overpayment claim. In January 2012, Halliburton sent a notice to KBR, requesting 

the appointment of an Accounting Referee, as provided in the TSA, “to resolve the 

disputes between the parties concerning the amounts owed by KBR to Halliburton 

under the TSA.” 

KBR responded that Halliburton’s request for an Accounting Referee to 

calculate—under the methods prescribed in the TSA—the amount of tax 

obligations owed by Halliburton for the pre-spinoff tax years was premature. KBR 
6

averred that first a determination had to be made whether Halliburton was entitled 

to pursue a claim to recover funds that it had paid into the intercompany account. 

KBR asserted that this preliminary determination was governed by provisions in 

the MSA.1

 

To support its position, KBR pointed to a release provision in the MSA. The 

provision states that KBR is released from liability for claims arising from acts or 

events that occurred prior to, or in association with, the corporate spinoff, unless 

such claims were specifically preserved in another agreement. KBR recognized 

that Halliburton claimed that it was entitled to reimbursement under the TSA. 

KBR alleged, however, that Halliburton had not pointed to any provision in the 

TSA that preserved Halliburton’s claim for reimbursement of monies paid into the 

settled intercompany account. Because the claim arises from pre-spinoff events 

and was not preserved in another agreement, KBR argued it was covered by the 

MSA’s release provision. 

KBR also asserted that Halliburton’s reimbursement claim was barred by the 

limitations provision in the MSA. That provision requires a party to give 

notification that it seeks to arbitrate a claim within two years of when a party knew 

or should have known of the claim. 

 1 KBR agreed that certain discrete tax claims between the parties, aside from the 

$256 million overpayment claim, were governed by the Tax Sharing Agreement 

and could be resolved by an Accounting Referee. However, those claims are not 

involved in this appeal.
7

In addition, KBR cited the 2005 settlement of the intercompany account. In 

settling the account, Halliburton had contributed approximately $300 million of the

intercompany account balance to KBR’s equity in the form of a capital

contribution and converted the balance in the intercompany account into two longterm notes payable to Halliburton. KBR averred that, because it had paid the notes 

in full, Halliburton’s overpayment claim was barred by the principle of accord and 

satisfaction. 

KBR served Halliburton with a demand for arbitration under the MSA. In 

the demand, KBR requested the AAA Panel declare (1) Halliburton’s overpayment 

claim for $256 million was discharged when KBR paid the notes it owed for 

settlement of the intercompany account; (2) Halliburton released its overpayment 

claim pursuant to the release provisions of the MSA; and (3) Halliburton’s 

overpayment claim is time-barred under the MSA’s limitations provision. 

Halliburton maintained its position that all aspects of the dispute, including 

whether it is entitled to pursue reimbursement from KBR, are within the scope of 

TSA’s arbitration provision. Unable to reach an agreement with KBR regarding 

which agreement’s arbitration provision controlled, Halliburton filed an application 

in the trial court to compel arbitration under the TSA and to stay any proceedings 

under the MSA. Among its arguments, Halliburton asserted that the trial court, not 

the AAA Panel, should determine which arbitration agreement controls the 
8

resolution of the discrete dispute regarding whether Halliburton is entitled to 

pursue the overpayment claim. 

KBR responded to Halliburton’s application and filed a cross-motion to 

compel arbitration under the MSA. In its filing, KBR asserted that the AAA Panel 

should determine which arbitration agreement controls the discrete dispute. KBR 

cited the section of the MSA, which provides that the AAA Panel has full power to 

determine issues of arbitrability. Halliburton replied, asserting that, regardless of 

whether it is permitted to determine issues of arbitrability under the MSA, the 

AAA Panel is not authorized to determine whether the dispute is arbitrable under 

the TSA. 

The trial court conducted a hearing on the parties’ competing arbitration 

motions. Two days later, on September 19, 2012, the trial court signed an order 

denying Halliburton’s application to compel arbitration under the TSA and to stay 

proceedings under the MSA. In the same order, the trial court granted KBR’s 

cross-motion to compel arbitration under the MSA. 

Halliburton appeals the trial court’s order denying its application to compel 

arbitration under the TSA. Halliburton presents three issues in its appellate brief.

While the interlocutory appeal was pending in this Court, arbitration 

proceeded before the AAA Panel under the MSA, as ordered by the trial court. In 

its written arbitration award, the AAA Panel (1) held that it “ha[d] jurisdiction over 
9

the claims presented”; (2) held that “Halliburton’s TSA claims are barred by 

§ 7.3(b) of the MSA”; and (3) ordered “the parties to return to the Accounting

Referee within 30 days of the Final Award for determination of the Parties’ 

remaining TSA claims.” Halliburton submitted its TSA claims to the Accounting 

Referee, who determined that “Halliburton is owed a net amount of $104,525,604 

from KBR under the TSA.” 

In the trial court, Halliburton filed a motion to vacate the AAA Panel’s 

award. See 9 U.S.C. § 10. Halliburton asserted that the award should be vacated 

because the AAA Panel did not have jurisdiction to determine its own jurisdiction 

to arbitrate the dispute or to decide any part of the dispute under the MSA. 

Halliburton maintained that the entire dispute should be decided under the TSA. 

The motion to vacate the award remains pending in the trial court. 

Appellate Jurisdiction

KBR has moved to dismiss this appeal for lack of jurisdiction, asserting that 

the trial court’s order is not appealable. Halliburton responds to the motion in its 

third issue, asserting that this Court has jurisdiction over the denial of its 

application to compel arbitration. The parties have also filed post-submission 

briefing regarding additional jurisdictional issues. Because it is a threshold matter, 

we consider the jurisdictional issues first before discussing the merits of the appeal. 

See CMH Homes v. Perez, 340 S.W.3d 444, 447 (Tex. 2011). 
10

A. Final Judgment or Interlocutory Appeal

Halliburton first asserts that the trial court’s order is appealable because it is 

a final judgment, not an interlocutory order. An order is final and appealable only 

if “it actually disposes of every pending claim and party or . . . it clearly and 

unequivocally states that it finally disposes of all claims and all parties.” Lehmann 

v. Har–Con Corp., 39 S.W.3d 191, 205 (Tex. 2001). The trial court’s September 

19, 2012 order does not contain finality language. Nevertheless, Halliburton 

argues that the order is a final judgment because all claims asserted by the parties 

in the trial court have been disposed of in the September 19, 2012 order. It asserts 

that the only claims raised by the parties in the trial court were the competing 

claims regarding the appropriate arbitral forum. Halliburton argues that, because it 

disposes of these claims, the order is a final judgment for purposes of appeal. We 

disagree. 

The competing filings in the trial court show that Halliburton had a live 

claim against KBR when the trial court signed the order denying Halliburton’s 

application to compel arbitration under the TSA. To be sure, there would be no 

need for arbitration if all claims between the parties had been resolved when the 

order was signed. Although Halliburton’s motion to vacate the Accounting 

Referee’s award is currently pending in the trial court, no final judgment has been 

signed confirming the award. Because it does not dispose of all issues remaining 
11

between the parties, but instead contemplates continuing resolution of 

Halliburton’s overpayment claim against KBR through the arbitration process, we 

conclude that the trial court’s order denying Halliburton’s application to compel 

arbitration is an interlocutory order. See Brook v. Pep Boys Auto. Supercenters, 

Inc., 104 S.W.3d 656, 660 (Tex. App.—Houston [1st Dist.] 2003, no pet.).

B. Appealability of Interlocutory Order

“Unless a statute authorizes an interlocutory appeal, appellate courts 

generally only have jurisdiction over final judgments.” CMH Homes, 340 S.W.3d 

at 447. “We strictly apply statutes granting interlocutory appeals because they are 

a narrow exception to the general rule that interlocutory orders are not immediately 

appealable.” Id. KBR asserts that the order is not an appealable interlocutory 

order under any statute. 

The parties agree that the Federal Arbitration Act (“FAA”) governs both 

arbitration agreements involved in this dispute. When a matter is subject to the 

FAA, a party may appeal an order “under the same circumstances that an appeal 

from a federal district court’s order or decision would be permitted” by section 16 

of the FAA. TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (Vernon Supp. 2013); 

see CMH Homes, 340 S.W.3d at 448. 

Section 16 of the FAA provides that an appeal may be taken from an order

“denying a petition under section 4 of this title to order arbitration to proceed.” 9 
12

U.S.C. § 16(a)(1)(B). Section 16 further provides that an appeal may not be taken 

from an interlocutory order compelling arbitration. 9 U.S.C. § 16(b)(3). 

Asserting that the appeal must be dismissed, KBR points out that the general 

purpose of FAA section 16 is to permit the immediate appeal of orders that are 

hostile to arbitration. See CMH Homes, 340 S.W.3d at 451 n.7. KBR argues that 

the trial court’s order is not hostile to arbitration because it requires the parties to 

arbitrate under the MSA. KBR characterizes the order as an order compelling 

arbitration. KBR asserts that the denial of Halliburton’s application to arbitrate 

was only a “necessary consequence” of the trial court’s grant of KBR’s motion to 

compel arbitration under the MSA. KBR points out that section 16 states that an 

order compelling arbitration is not immediately appealable. See 9 U.S.C. 

§ 16(b)(3). However, it is the substance and function of the order viewed in the 

context of the record that controls our interlocutory jurisdiction, not KBR’s

characterization of the order. See Schlumberger Technology Corp. v. Baker 

Hughes Inc., 355 S.W.3d 791, 800 (Tex. App.—Houston [1st Dist.] 2011, no pet.)

(holding that order granting Baker Hughes’s motion to compel arbitration under 

one agreement, but denying Schlumberger’s motion for arbitration under different 

agreement, was an appealable interlocutory order). 

In the context of this record, we conclude that the substance and function of 

the order in this case supports its characterization as one denying a motion to 
13

compel arbitration. See 9 U.S.C. § 16(a)(1)(B). Here, when KBR refused to 

arbitrate pursuant to the terms of the TSA, Halliburton petitioned the trial court to 

enforce its alleged contractual right to have arbitration proceed pursuant to the 

terms of TSA. Thus, “[t]he trial court considered two related arbitration 

agreements, granted a motion seeking to compel arbitration under one of them, and 

denied a motion seeking to compel arbitration under the other.” Schlumberger,

355 S.W.3d at 800. Despite ordering arbitration to proceed under the MSA, the 

trial court specifically denied Halliburton’s asserted contractual right to arbitrate

under the terms of the TSA. See id. Based on the trial court’s characterization of 

Halliburton’s application as one to compel arbitration, its express denial of the

application, and the resulting denial of Halliburton’s asserted contractual right to 

arbitrate under the TSA, we conclude that the trial court’s order is an appealable 

order under FAA section 16. See id.; see also 9 U.S.C. § 16(a)(1)(B); Tex. La 

Fiesta Auto Sales, LLC v. Belk, 349 S.W.3d 872, 878 (Tex. App.—Houston [14th 

Dist.] 2011, no pet.); McReynolds v. Elston, 222 S.W.3d 731, 738 (Tex. App.—

Houston [14th Dist.] 2007, no pet.).

C. Expert Determination versus Arbitration

KBR has filed a post-submission brief in which it asserts that the process by 

which the Accounting Referee resolves Halliburton’s claims under the TSA is not 

arbitration, but rather, is an expert determination. For this reason, KBR asserts that 
14

Halliburton is not entitled to interlocutory appeal of its order denying its motion to 

compel arbitration under the TSA because, if the resolution of the dispute under 

the TSA is not arbitration, then Halliburton is not entitled to relief under the FAA, 

including an interlocutory appeal. See 9 U.S.C. § 16(a)(1)(B). 

We examine federal case law to determining whether resolution of the 

dispute under the TSA constitutes arbitration for purposes of the FAA. See CMH 

Homes, 340 S.W.3d at 449 (“[A]n interlocutory appeal in this case is permitted 

only if it would be permitted under the same circumstances in federal court under 

section 16.”); see also Little v. Tex. Dep’t of Crim. Justice, 148 S.W.3d 374, 382 

(Tex. 2004) (examining federal law when interpreting state statute that 

incorporates federal statute).

KBR and Halliburton both rely on Fit Tech, Inc. v. Bally Total Fitness 

Holding Corp., 374 F.3d 1 (1st Cir. 2004) as authority for their respective positions 

in which they assert that the alternate dispute resolution provision in the TSA is, or 

is not, an arbitration provision. We agree that Fit Tech is instructive because it 

involved the question of whether an “accountant remedy” provision was an 

arbitration provision. See id. at 6. 

In Fit Tech, the court reasoned that whether the accountant remedy is 

arbitration “does not depend on nomenclature used in the agreement”; rather it 

depends on “how closely the specified procedure resembles classic arbitration and 
15

whether treating the procedure as arbitration serves the intuited purposes of [the 

legislature].” Id. at 7. The court held that “the common incidents of arbitration of 

a contractual dispute” include the following: (1) whether the remedy is “final”; (2) 

whether it involves an “independent adjudicator”; (3) whether there are 

“substantive standards”; and (4) whether there is “an opportunity for each side to 

present its case.” Id.

The court concluded that “this is arbitration in everything but name.” Id. In 

reaching its conclusion, the court remarked that “[s]electing an expert to handle 

arbitration is by no means uncommon.” Id. at 6 n.4. Supporting its conclusion, the

court noted that the accountant remedy is “final.” Id. at 7. The court also observed 

that the accountant remedy incorporates “common incidents of arbitration of a 

contractual dispute.” Id. Specifically, an “independent adjudicator” determines

the remedy, and the agreement contains “substantive standards” for the remedy. 

Id. Because the accountant remedy would be decided on the parties’ written 

submissions, each side has an opportunity to present its case. Id.

The Fit Tech court observed that the accountant remedy has an uncommon 

feature: it is limited to resolving accounting issues; thus, non-accounting disputes 

between the parties could not be resolved by the accounting remedy. However, the 

court stated that “arbitrations sometimes do cover only a part of the overall dispute 

between the parties.” Id. 
16

In this case, the following provision sets forth the procedure for the 

Accounting Referee to resolve certain disputes under the TSA: 

Section 8.11 Resolution of Certain Disputes. Any disagreement 

between the Parties with respect to any matter that is the subject of 

this Agreement, including, without limitation, any disagreement with 

respect to any calculation or other determinations by Halliburton 

hereunder, which is not resolved by mutual agreement of the Parties, 

shall be resolved by a nationally recognized independent accounting 

firm chosen by and mutually acceptable to the Parties hereto (an 

“Accounting Referee”). Such Accounting Referee shall be chosen by 

the Parties within fifteen (15) business days from the date on which 

one Party serves written notice on the other Party requesting the 

appointment of an Accounting Referee, provided that such notice

specifically describes the calculations to be considered and resolved 

by the Accounting Referee. In the event the Parties cannot agree on 

the selection of an Accounting Referee, then the Accounting Referee 

shall be any office or branch of the public accounting firm of Deloitte 

& Touche. The Accounting Referee shall resolve any such 

disagreements as specified in the notice within thirty (30) days of 

appointment; provided, however, that no Party shall be required to

deliver any document or take any other action pursuant to this Section 

8.11 if it determines that such action would result in the waiver of any 

legal privilege or any detriment to its business. Any resolution of an 

issue submitted to the Accounting Referee shall be final and binding 

on the Parties hereto without further recourse. The Parties shall share 

the costs and fees of the Accounting Referee equally.

As in Fit Tech, we conclude that the procedure outlined in Section 8.11 of 

the TSA “is arbitration in everything but name” because it has the “common 

incidents” of arbitration. See id. Section 8.11 meets the four-prong Fit Tech test 

for determining whether a dispute-resolution process is arbitration. As to the first 

three prongs, Section 8.11 provides for a “final and binding” determination by an 
17

“independent” accounting firm in accordance with the “substantive standards” set 

forth in the TSA. See id. Thus, these prongs are met.

As to the fourth prong, KBR asserts that Section 8.11 does not provide an 

opportunity for each side to present its case because it does not contemplate an 

evidentiary hearing or discuss discovery. Halliburton correctly points out that the 

accounting remedy in Fit Tech also did not provide for an evidentiary hearing or 

discovery. Nonetheless, the court held that each side was presented an

“opportunity to be heard” because the accountant remedy was based on the parties’ 

“written submissions.” See id. 

Here, Section 8.11 provides that the Accounting Referee will resolve “[a]ny 

disagreement between the Parties with respect to any matter that is the subject of 

[the TSA Agreement],” as provided in a party’s “written notice,” which must 

“specifically describe[] the calculations to be considered and resolved by the 

Accounting Referee.” The provision also contemplates at least some form of 

discovery because it states, “[N]o Party shall be required to deliver any document 

or take any other action pursuant to this Section 8.11 if it determines that such 

action would result in the waiver of any legal privilege or any detriment to its 

business.” These requisites provide an opportunity for the parties to present their 

respective cases to the Accounting Referee that is comparable to the Fit Tech

provision, which specified that the accounting remedy would be based on the
18

“written submissions” of the parties. See id. In short, the dispute resolution 

process outlined in Section 8.11 is not, as KBR asserts, an expert determination; 

rather, it is a form of arbitration. See id.; see also Harker’s Distribution, Inc. v. 

Reinhart Foodservice, L.L.C., 597 F.Supp.2d 926, 939–41 (N.D. Iowa 2009)

(holding that an “accounting remedy” is arbitration); Hodges v. MedAssets Net 

Revenue Systems, No. 1:07–cv–2985–WSD, 2008 WL 476140, at *3 (N.D. Ga. 

Feb. 19, 2008) (determining that the resolution clause, providing that “any 

disputes” would be submitted to independent accounting firm, was a form of final 

and binding arbitration). 

D. Mootness of Appeal

In post-submission briefing, KBR and Halliburton also addressed whether 

this interlocutory appeal is moot because the parties have arbitrated their dispute 

since this appeal was filed. KBR asserts that the appeal is moot “because the 

district court will consider the same arguments presented in this appeal when it 

decides Halliburton’s motion to vacate” the AAA Panel’s award made pursuant to 

the MSA. 

We disagree that the trial court’s consideration of the same issues in 

determining the motion to vacate as have been raised in this interlocutory appeal 

renders this appeal moot. To the contrary, an appeal becomes moot only “when 

the court’s action on the merits cannot affect the rights of the parties.” VE Corp. v. 
19

Ernst & Young, 860 S.W.2d 83, 84 (Tex. 1993). Here, the disposition of this 

appeal has the potential to affect the rights of the parties with respect to the trial 

court’s decision on Halliburton’s motion to vacate the arbitration award.

In support of its vacatur motion, Halliburton asserts, as it does in this appeal, 

that the AAA Panel was without jurisdiction to determine issues of arbitrability 

with respect to a determination of its own jurisdiction to decide the defensive 

issues raised by KBR. As discussed infra, our determination of whether the AAA 

Panel has jurisdiction to arbitrate issues of arbitrabilty regarding the parties’ claims 

is also dispositive of this interlocutory appeal. For this reason, our decision on the 

merits in this appeal has the potential to determine the pending motion to vacate. 

See, e.g., Northwest Independent School Dist. v. Carroll Independent School Dist.,

No. 02-10-00105-CV, 2014 WL 2770488, *2 (Tex. App.—Fort Worth June 19, 

2014, no pet.) (holding that decision on question of law in earlier, interlocutory 

appeal was “law of the case” in subsequent appeal from final judgment). In other 

words, our action on the merits in this appeal can affect the rights of the parties in 

this case. See VE Corp., 860 S.W.2d at 84. Thus, we hold that this appeal is not 

moot. See id. 

E. Conclusion Regarding Jurisdiction

For the reasons discussed, we hold that we have jurisdiction over this 

interlocutory appeal. See TEX. CIV. PRAC. & REM. CODE § 51.016; 9 U.S.C. 
20

§ 16(a)(1)(B). We deny KBR’s motion to dismiss and sustain Halliburton’s third 

issue. 

Denial of Halliburton’s Motion to Compel Arbitration 

In its first issue, Halliburton asserts that the trial court erred by denying its 

application to compel arbitration under the TSA and concomitantly granting 

KBR’s cross-motion to compel arbitration under the MSA. The first issue 

addresses the threshold dispute of who decides issues of arbitrability in this case: 

the AAA Panel or the court. Halliburton points out that the TSA does not 

expressly reserve issues of arbitrability for the arbitrator. In other words, the TSA 

is silent regarding who determines whether a dispute is arbitrable under the TSA. 

For this reason, Halliburton asserts that only the court may decide whether KBR’s 

defensive claims should be decided by the Accounting Referee under the TSA or 

whether the defensive claims should be decided by the AAA Panel under the MSA. 

In contrast, KBR points out that the MSA expressly states that the AAA Panel will 

determine issues of arbitrability. 

If KBR is correct that the AAA Panel may determine the arbitrability of the 

dispute, then the trial court properly denied Halliburton’s application to compel 

arbitration under the TSA and properly granted KBR’s cross-motion to compel 

arbitration before the AAA Panel pursuant to the MSA. Thus, we first determine 
21

whether the AAA Panel had authority to arbitrate issues of arbitrability involving 

the TSA in this case.2

 

A. AAA Panel’s Authority to Determine Arbitrability Issue

Threshold questions of arbitrability are to be resolved by courts unless the 

parties clearly and unmistakably agree to submit these issues to arbitration. 

 2 Halliburton argues that “arbitrability” is not at issue here because the parties agree 

that the claims should be arbitrated. The controversy concerns who should decide 

whether KBR’s defensive claims are arbitrated under the TSA by the Accounting 

Referee or under the MSA by the arbitrators. Halliburton asserts that a “who 

should decide question” is not a question of arbitrability. We disagree. In 

Howsam v. Dean, the United States Supreme Court defined the phrase “questions 

of arbitrability” to encompass

the kind of narrow circumstance where contracting parties would 

likely have expected a court to have decided the gateway matter, 

where they are not likely to have thought that they had agreed that an 

arbitrator would do so, and, consequently, where reference of the 

gateway dispute to the court avoids the risk of forcing parties to 

arbitrate a matter that they may well not have agreed to arbitrate.

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S. Ct. 588, 

592 (2002). As examples of such “questions of arbitrability,” the Court 

cited cases involving disputes about whether an arbitration contract bound 

parties who did not sign the agreement (First Options of Chicago, Inc. v. 

Kaplan, 514 U.S. 938, 943–44, 115 S. Ct. 1920, 1924 (1995)), whether an 

arbitration agreement survived a corporate merger and bound the resulting 

corporation (John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 547, 84 

S. Ct. 909, 913 (1964)), and whether an arbitration clause, in a concededly 

binding contract, applied to a particular type of controversy (AT&T Techs., 

Inc. v. Commc’ns Workers, 475 U.S. 643, 649, 106 S. Ct. 1415, 1419 

(1986)). See id. at 84, 123 S. Ct. at 592. In short, issues of contract 

formation with respect to arbitration are typically questions of arbitrability. 

See Granite Rock Co. v. Int’l Brotherhood of Teamsters, 561 U.S. 287, 297, 

130 S. Ct. 2847, 2856 (2010). Here, the issue of whether KBR’s defensive 

claims should be arbitrated under the MSA or under the TSA fits into this 

rubric. It is an issue of arbitrability. 
22

Schlumberger, 355 S.W.3d at 802 (citing First Options of Chicago, Inc. v. Kaplan, 

514 U.S. 938, 943, 115 S. Ct. 1920, 1923 (1995); In re Weekley Homes, L.P., 180 

S.W.3d 127, 130 (Tex. 2005)). Here, the determination of whether the parties 

agreed to submit the arbitrability of KBR’s defensive claims to the AAA Panel 

depends on an interpretation of the parties’ contracts, which we review de novo. 

See id. (citing In re Dillard Dep’t Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006); 

J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003)). 

To support its position that the arbitrators are empowered to decide under 

which agreement the entire dispute should be arbitrated, KBR points to the 

following provisions in the MSA:

ARTICLE VII

ARBITRATION; DISPUTE RESOLUTION

7.1 Agreement to Arbitrate. The procedures for discussion, 

negotiation and arbitration set forth in this Article VII shall be 

the final, binding and exclusive means to resolve, and shall apply 

to all disputes, controversies or claims (whether in contract, tort or 

otherwise) that may rise out of or relate to, or arise under or in 

connection with: (a) this Agreement and/or any Ancillary 

Agreement, (b) the transactions contemplated hereby or thereby, 

including all actions taken in furtherance of the transactions 

contemplated hereby or thereby on or prior to the date hereof, or (c) 

for a period of ten years after the IPO Closing Date, the commercial or 

economic relationship of the parties, in each case between or among 

any member of the Halliburton Group and the KBR Group. . . .

. . . .
23

7.6 Discovery and Certain Other Matters

. . . .

(b) The arbitrators shall have full power and authority to 

determine issues of arbitrability but shall otherwise be 

limited to interpreting or construing the applicable provisions of 

this Agreement, any Ancillary Agreement or any Prior Transfer 

Agreement, and will have no authority or power to limit, 

expand, alter, amend, modify, revoke or suspend any condition 

or provision of this Agreement, any Ancillary Agreement or 

any Prior Transfer Agreement . . . .

(Emphasis added.) Read in context, the arbitrability provision found in MSA 

Article 7.6(b) shows a clear and unmistakable intent by the parties to allow the 

AAA Panel to determine whether a dispute is arbitrable under the MSA or under 

an ancillary agreement, such as the TSA. Nonetheless, Halliburton argues that the 

MSA’s arbitrability provision has no application to the determination of whether 

the parties’ entire dispute should be arbitrated under the TSA because the MSA 

and TSA “are complete and separate contracts.” 

Halliburton points out that the TSA is entirely silent regarding who 

determines issues of arbitrability, which includes the determination of whether the 

TSA arbitration clause applies to the resolution of KBR’s defensive issues. 

Halliburton relies on the legal precept that, when an arbitration agreement is silent 

about who determines issues of arbitrability, the court, rather than the arbitrator, 

determines the issue. See In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 

(Tex. 2009). It is on this basis that Halliburton asserts that the court, rather than 
24

the AAA Panel, has the authority to determine whether KBR’s defensive issues fall 

within the scope of the the TSA’s or MSA’s arbitration provision. 

KBR responds that the TSA and the MSA are not “complete and separate” 

agreements. Instead, the two agreements must be construed as a single, integrated 

contract. KBR points out that the MSA and TSA each provide that it “shall be 

governed and construed in accordance with Delaware law.” Delaware courts have 

embraced the principle that agreements executed in close temporal proximity by 

the same parties in connection with a single business transaction are to be 

harmonized and construed together as a single contract. See, e.g., E.I. du Pont de 

Nemours & Co. v. Shell Oil Co., 498 A.2d 1108, 1115 (Del. 1985) (“Where two 

agreements [relating to one transaction] are executed on the same day and are 

coordinated to the degree outlined above, in essence, they form one contract and 

must be examined as such.”); Martin Marietta Materials, Inc. v. Vulcan Materials 

Co., 56 A.3d 1072, 1119 (Del. Ch. 2012) (“[T]he JDA and the NDA are 

interrelated agreements that relate to the same course of commercial activity and so 

should be read together and harmonized despite the two week time difference 

between their effective dates.”)3

; Ashall Homes Ltd. v. ROK Entm’t Grp. Inc., 992 

 3 In Martin Marietta Materials, Inc. v. Vulcan Materials Co., 56 A.3d 1072, 1119 

n.192 (Del. Ch. 2012), the court also cited the following authority: RESTATEMENT 

(SECOND) OF CONTRACTS § 202(2) (1981) (“A writing is interpreted as a whole, 

and all writings that are part of the same transaction are interpreted together.”); 

17A C.J.S. CONTRACTS § 315, at 337 (1999) (“In the absence of anything to 
25

A.2d 1239, 1248 (Del. Ch. 2010) (reading related contemporaneous agreements 

together because they effectuated separate steps of single integrated transaction); 

Baypo Ltd. P’ship v. Tech. JV, LP, 940 A.2d 20, 27 (Del. Ch. 2007) (recognizing 

that agreements, contemporaneously executed as part of one business transaction, 

must be read together as one document); Karish v. SI Int’l, Inc., No. Civ. A. 19501, 

2002 WL 1402303, at *3 (Del. Ch. June 24, 2002) (same). 

Here, we agree with KBR that the MSA and the TSA must be harmonized 

and construed together as one contract. The agreements, between the same parties, 

signed five days apart, are facets of the same transaction entered into for the 

unitary purpose of effectuating the corporate separation of KBR from Halliburton. 

Each agreement provides an integral component to the transaction. The 

MSA is the broader umbrella agreement, providing the structure for the corporate 

separation, while the TSA sets out the more technical principles by which KBR 

and Halliburton will allocate and share tax liabilities in the context of the corporate 

separation. Although the parties used the MSA and a number of ancillary 

agreements to govern the various aspects of the corporate spinoff, the MSA and the 

 

indicate a contrary intention, writings executed at the same time and relating to the 

same transaction are construed together as a single contract, as though they were 

as much one in form as they are in substance, in order to determine the intent, 

rights, and interests of the parties.”); 11 WILLISTON ON CONTRACTS § 30:26 (4th 

ed. 1999) (“[I]nstruments executed at the same time, by the same contracting 

parties, for the same purpose, and in the course of the same transaction will be 

considered and construed together as one contract or instrument, even though they 

do not in terms refer to each other.”).
26

TSA were each dependent on the entire transaction. In other words, the 

agreements were vital and interrelated parts of one deal. Indeed, each agreement 

anticipates and contemplates the execution of the other. The MSA recites, “[T]he 

parties intend to set forth in this Agreement, including the Schedules hereto and 

the Ancillary Agreements contemplated hereby, the principal arrangements 

between and among them and the members of their respective Groups regarding 

the separation of the KBR Group from the Halliburton Group, the IPO and certain 

future transactions.” (Emphasis added.) The MSA specifically defines the TSA as 

an ancillary agreement. Thus, the MSA and TSA should be read together as one 

integrated agreement. 

Halliburton asserts that, even when the two agreements are read together, a 

conflict nonetheless exists between the arbitration provisions of the TSA and of the 

MSA. In support of this position, Halliburton cites the following TSA provision, 

which it asserts precludes the application of the MSA’s arbitrability provision to 

arbitration sought under the TSA’s arbitration clause: 

Section 8.16 Entire Agreement; Termination of Prior Agreements. 

(a) This Agreement contains the entire agreement between the Parties 

with respect to the subject matter hereof and supersedes all other 

agreements, whether or not written, in respect of any Tax . . . .

(b) Without limiting the foregoing, the Parties acknowledge and agree 

that in the event of any conflict or inconsistency between the 

provisions of this Agreement and the provisions of the Master 

Separation Agreement or the Master Separation and Distribution 
27

Agreement (as applicable), the provisions of this Agreement shall take 

precedence and to such extent shall be deemed to supersede such 

conflicting provisions under the Master Separation Agreement or the 

Master Separation and Distribution Agreement . . . .

Halliburton also relies on the following provision of the MSA:

9.2 Conflicting Agreements; Entire Agreement

. . . Except as otherwise expressly provide herein, in the event of a 

conflict between this Agreement and any Prior Transfer Agreement, 

any Ancillary Agreement or any agreement set forth on Schedule 9.2 

hereto, the provisions of such Prior Transfer Agreement, such 

Ancillary Agreement or such agreement set forth on Schedule 9.2 

hereto, as applicable, shall prevail over the provisions hereof.

The above provisions specify that the TSA supersedes the MSA with respect 

to the subject matter of the TSA and, concomitantly, to the extent that the 

provisions of the two agreements conflict or present inconsistencies. Halliburton 

avers that a conflict exists between the TSA’s and the MSA’s arbitration 

provisions. Halliburton intimates that the TSA’s complete silence regarding the 

issue of arbitrability creates a conflict with the MSA’s express provision, which

mandates that issues of arbitrability be decided by the AAA Panel. 

We disagree with Halliburton’s reading. The TSA’s silence on the subject 

of arbitrabilty does not present a conflict with the MSA when, as discussed, the 

two agreements must be read as one, integrated contract. To the contrary, when 

the agreements are read as one contract, entered into to effectuate a singular 
28

transaction, the TSA’s silence regarding arbitrability reinforces the application of 

the MSA’s arbitrability clause to arbitration sought under the TSA. 

In contrast to the TSA’s silence, the MSA’s arbitration provision expressly 

addresses arbitrability. It states, “The procedures for . . . arbitration set forth in this 

Article [] shall be the final, binding and exclusive means to resolve, and shall apply 

to all disputes, controversies or claims . . . that may rise out of or relate to, or arise 

under or in connection with . . . any Ancillary Agreement,” including the TSA. 

Halliburton correctly points out that the parties specifically reserved for 

arbitration under the TSA “[a]ny disagreement between the Parties with respect to 

any matter that is the subject of [the TSA].” This corresponds to TSA section 

8.16(a), which provides, “This Agreement contains the entire agreement between 

the Parties with respect to the subject matter hereof . . . .” 

In making its argument that the MSA and TSA arbitration provisions 

conflict, Halliburton fails to account for the limiting “subject matter” language 

contained in the TSA; that is, it fails to account for the fact that the TSA 

supersedes the MSA only as to the subject matter of the TSA. To aid in the 

determination of what constitutes the “subject matter” of the TSA, we turn to the 

Tax Sharing Agreement’s opening provisions, which state: “[T]he Parties wish to 

set forth the general principles under which they will allocate and share various 

Taxes . . . and related liabilities” and “to provide for the allocation between the 
29

Halliburton Group and the KBR Group of all responsibilities, liabilities and 

benefits relating to all Taxes paid or payable by either group” for the relevant 

taxable periods. In short, the subject matter of the agreement is the allocation and 

sharing of taxes and tax liabilities between parties incident to the corporate spinoff. 

The MSA’s arbitrability provision, specifying that the AAA Panel will 

decide issues of arbitrability, is neither “the subject matter” of the TSA nor does it 

conflict with the TSA’s arbitration provision, which is silent regarding issues of 

arbitrability. Admittedly, the provisions cited by Halliburton require that no 

express provision of the TSA be overridden by that of the MSA; however, the cited 

provisions do not reflect any intent to disrupt or to negate the effects of the subject 

matter expressly included in the MSA but not addressed in the TSA. Such subject 

matter addressed in the MSA includes who decides issues of arbitrability. 

Specifically, the parties expressly agreed in the MSA that “[t]he arbitrators shall 

have full power and authority to determine issues of arbitrability . . . .” 

Reading the TSA and MSA as one, integrated agreement, we conclude that 

the AAA Panel was the proper tribunal to determine whether KBR’s defensive 

claims should be arbitrated under the TSA or under the MSA. No conflict exists 

between the TSA and MSA with respect to the issue of arbitrability, which is not 

addressed in the TSA. We make no determination whether KBR’s defensive 
30

claims fall within the scope of the TSA arbitration provision or within the MSA 

arbitration provision. That determination is one of arbitrability reserved for the 

arbitrators in this case. 

We hold that the trial court could have properly determined that the AAA 

Panel was authorized, under the MSA arbitrability provision, to determine its own 

jurisdiction to arbitrate KBR’s defensive claims. Thus, we further hold that the 

trial court did not err in denying Halliburton’s application to compel arbitration. 

We overrule Halliburton’s first issue.4

Conclusion

We deny KBR’s motion to dismiss the appeal. We affirm the trial court’s 

order denying Halliburton’s application to compel arbitration.

Laura Carter Higley

Justice 

Panel consists of Justices Jennings, Keyes, and Higley.

 4 Because Halliburton’s first issue is dispositive of this interlocutory appeal, we do 

not reach Halliburton’s second issue, which challenges other possible grounds on 

which to uphold the trial court’s order.