Opinion ID: 2419605
Heading Depth: 1
Heading Rank: 4

Heading: Arkansas Arbitration Act

Text: Section 16-108-201 is entitled Agreement to arbitrateApplication and provides: (a) A written agreement to submit any existing controversy to arbitration arising between the parties bound by the terms of the writing is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract. (b) A written provision to submit to arbitration any controversy thereafter arising between the parties bound by the terms of the writing is valid, enforceable, and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract; provided, that this subsection shall have no application to personal injury or tort matters, employer-employee disputes, nor to any insured or beneficiary under any insurance policy or annuity contract. [Emphasis added.] Lamb contends that the Arkansas Insurance Code, particularly the provisions found in Ark.Code Ann. §§ 23-60-102 and 23-60-106 (1987), make it clear that a surety bond is a form of insurance. We concur in that contention to the extent of recognizing that companies offering surety bonds come within the regulatory provisions of the Code. We do not, however, agree that a surety bond is an insurance policy as contemplated by the Arbitration Act and § 16-108-201(b). In Fausett Builders v. Globe Indemnity Co., supra , we stated that suretyship may be defined as a contractual relation whereby one person engages to be answerable for the debt or default of another. In that case, we explained the concept of suretyship, by quoting the following language from Hall v. Equitable Surety Company, 126 Ark. 535, 191 S.W. 32 (1917): Where the contract takes the form of ordinary suretyship, `the agreement of the surety is that he will do the thing which the principal has undertaken.' Lamb has not been insured against loss; rather, it has been assured performance of the contract with Matson. The surety bond on which Lamb has brought suit incorporates an agreement to the effect that questions of breach and performance are subject to arbitration. The Arkansas Arbitration Act does not prohibit the enforcement of that provision. In conclusion, we understand the Trial Court's remark that if Lamb is required to arbitrate the bond becomes meaningless, but we do not necessarily agree with it. That statement takes no account of the possibility that a remedy may remain against USF & G if it is determined through arbitration that Matson has not performed or has not properly performed the contract. We do not decide that issue here. Of course, it is equally logical to say that, if Lamb is allowed to sue USF & G with respect to whether Matson has performed, the arbitration clause in the construction contract becomes meaningless. Our view is that, at least at this juncture in the proceedings, there remains the possibility that effect may be given to both the arbitration clause and the performance bond. We hold that Matson is entitled to intervene without limiting intervention to protection of its right to defend a claim for reimbursement from USF & G. Reversed and remanded.