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ST. LAWRENCE EXPLOSIVES CORP. v. WORTHY BROS. PIPE
February 24, 1996
ST. LAWRENCE EXPLOSIVES CORPORATION, Petitioner, against WORTHY BROTHERS PIPELINE CORPORATION, Respondent.
The opinion of the court was delivered by: MCAVOY
Petitioner St. Lawrence Explosives Corporation ("St. Lawrence"), petitions the Court to confirm and enter judgment upon an award granted by an arbitrator in favor of St. Lawrence and against respondent Worthy Brothers Pipeline Corporation ("Worthy Brothers") pursuant to a construction subcontract entered into by the parties. Originally filed by petitioner in New York State Supreme Court, Jefferson County, the case was removed by respondent to this Court based on allegations of both diversity and federal question jurisdiction. The primary issue before the Court is whether the arbitration provided for in the subcontract should be considered binding or nonbinding upon the parties.
The subcontract, "AIA Document A401" is entitled "Standard Form of Agreement Between Contractor and Subcontractor" and references a project in which petitioner, the subcontractor, agreed to excavate a 15-mile trench necessary for construction of a natural gas pipeline. The relevant clauses of the subcontract read as follows:
[EDITOR'S NOTE: TEXT WITHIN THESE SYMBOLS [O>
6.1 Any controversy or claim between the Contractor and the Subcontractor arising out of or related to this Subcontract, or the breach thereof, shall be settled by arbitration, [O>which shall be conducted in the same manner and under the same procedure as provided in the Prime Contract with respect to claims between the Owner and the Contractor, except that a decision by the Architect shall not be a condition precedent to arbitration.
[O> 6.4 The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.
(Sherer Aff. Ex. A at 5.)
As an initial matter, the parties have disagreed in regard to whether state or federal law applies to the subcontract, although petitioner seems to concede in its Reply Memorandum that the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq., is controlling. In regard to the subcontract itself, petitioner essentially argues that because the subcontract refers to the AAA Rules, it reveals an intent by the parties to have their arbitration governed in all regards by the AAA Rules. The AAA Rules provide for binding arbitration,
and as a result, the arbitration here should be binding. Respondent counters that, by striking out Section 6.4, the parties clearly intended that the arbitration be nonbinding, the AAA Rules notwithstanding.
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