A Win For Arbitration In 2018

By Tara Muller

This article appeared originally in The Peacemaker, the newsletter of the NCBA’s Dispute Resolution Section.

In the world of public opinion, alternative dispute resolution still struggles to compete with its crusty cousin – the traditional, costly, and lengthy trial process. For years, parties interested in enforcing arbitration provisions in lieu of trial have wrestled with the obstacle of unclear North Carolina appellate precedent as to whether courts would compel mandatory arbitration when the parties engaged in some initial litigation before moving to enforce the arbitration provision.  Fortunately for the up-and-coming arbitration protagonist in this tale, the North Carolina Court of Appeals kicked off 2018 with a bang, clearing up a history of self-described “divergent case law” and handing a win to parties interested in enforcing arbitration provisions.

In IPayment v. Grainger, et al, (COA16-1908, 2 Jan 2018), the Court recognized strong public policy in favor of arbitration and held the plaintiff had not waived its right to compel arbitration either 1) by waiting two months after a counterclaim to move to compel arbitration, or 2) by amending its complaint to add a split funding argument against another defendant not subject to arbitration. While some of the opinion is admittedly fact-specific regarding whether the allegations involving funding were inextricably linked to the causes of action governed by the arbitration provision, the Court of Appeals revealed in its opinion very strong support for the idea of arbitration, using the term “public policy” five times in its 19-page decision. If there ever were a doubt about the North Carolina judiciary’s support of alternative dispute resolution, IPayment v. Grainger clears the waters, perhaps signaling a more generalized trend toward future enforcement of alternative dispute resolution provisions. Onward and upward, young ADR.

Tara Muller is a certified superior court mediator, legal writer, and appellate attorney. Reach her at tara@mullerlawfirm.com.