Opinion ID: 1060160
Heading Depth: 2
Heading Rank: 1

Heading: failure to comply

Text: 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 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 non-compliance 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.