Cases—Arbitration—Broad arbitration clause should be viewed broadly

A broadly written arbitration clause will get broadly interpreted in Washington, the state’s Court of Appeals held in a recent decision.

In the case, a buyer and a seller of a $260,000 grinding machine got into a dispute.  A clause in the contract provided:

Manufacturer and Distributor both agree and acknowledge that this Agreement involves an interstate sale of the equipment purchased hereunder, with a substantial effect upon interstate commerce, and that the Federal Arbitration Act applies to and governs disputes between the parties relating in any way to the subject of this Agreement.  In the event of any dispute or controversy of any kind between Manufacturer and Distributor concerning this Agreement, or the equipment sold pursuant hereto, or any warranties or representations or performance failures relating in any way to the equipment or condition or performance of the equipment, or damages of any kind involving said equipment, the parties agree that the same shall be resolved by binding arbitration in Birmingham, Alabama by a panel of three arbitrators under the rules and procedures of the American Arbitration Association.

When the deal went sour, the seller seized the equipment.  The buyer brought an action alleging (1) tortious interference with business; (2) unlawful seizure; (3) unlawful Uniform Commercial Code filing; and (4) default on the underlying promissory note.

All of these claims, however, “implicate the parties’ respective rights and obligations under the agreement,” wrote Acting Chief Judge Ann L. Ellington, and therefore were within the scope of the “broad” arbitration clause provided in the contract.  Precision Husky Corp. v. Mountain Equipment, Inc., 2004 Wash. App. LEXIS 2860 (Nov. 29, 2004).