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

Heading: deciding arbitrability

Text: 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.
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.
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, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986), and Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-42, 74 L.Ed.2d 765 (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, 131 L.Ed.2d 985 (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 ___, 115 S.Ct. 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 ___, 115 S.Ct. 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] 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.