Section 60 Waiver of Arbitration Rights

• Library: Arbitration and Mediation 2011

One or more parties to an arbitration agreement can waive the right to arbitrate. Waiver occurs when a party:

· knew of an existing right to arbitrate;

· acted inconsistently with that right; and

· prejudiced the other party by the inconsistent acts.

JBS Farms, Inc. v. Fireman’s Fund Agribusiness, Inc., 205 S.W.3d 910, 913 (Mo. App. S.D. 2006); Kelly v. Golden, 352 F.3d 344 (8^th Cir. 2003). The courts often focus on the prejudice component in determining whether a waiver exists. Triarch Indus., Inc. v. Crabtree, No. WD 61578, 2004 WL 941218 (Mo. App. W.D. May 4, 2004). In this case, however, Triarch was transferred to the Supreme Court, which ultimately held that, under the language of the specific arbitration clause at issue, Triarch waived its right to arbitration by filing a lawsuit, and thus the issue of prejudice was irrelevant. Triarch Indus., Inc. v. Crabtree, 158 S.W.3d 772, 776–77 (Mo. banc 2005). The Eighth Circuit reached a nearly identical conclusion in Erdman Co. v. Phoenix Land & Acquisition, LLC, No. 10‑2854, 2011 WL 3568929 (8^th Cir. Aug. 16, 2011), by holding that the federal policy favoring arbitration does not require a showing of prejudice when the party who drafted the contract that provided for arbitration initially chose to litigate the entire dispute in a single lawsuit. The court found this to be a waiver of that party’s right to arbitration.

The courts have found that the following periods of time between filing a lawsuit and filing a motion to compel arbitration were not of sufficient duration, absent other factors, to constitute a waiver:

· Four months, Getz Recycling, Inc. v. Watts, 71 S.W.3d 224 (Mo. App...