Court Declines To Infer Agreement To Arbitrate From Ambiguous Contract Language

In Mainthia Technologies Inc. v. Recruiting Force, LLC d/b/a Recruit Veterans, the Texas Court of Appeals affirmed a lower court’s denial of a motion to compel arbitration, for the simple reason “that a joint-venture agreement between [the parties] ‘does not include an agreement to arbitrate.'”

The agreement at issue provided for an attempt to resolve disputes through direct discussions between the parties, to be followed by mediation before the American Arbitration Association “as a ‘condition precedent to arbitration as herein provided.'”

That was it. Nowhere else did the agreement reference arbitration. While the party seeking to compel argued “that the intent to submit to arbitration is implicit in [the agreement’s] use of the word ‘herein,'” the court disagreed, holding that to find an obligation to arbitrate would require the court to rewrite the parties’ agreement or to add to its language.

Although the court’s opinion offers no insight into the origins of the ambiguously incomplete language of the agreement, the litigation surrounding the issue of arbitrability serves as a cautionary tale to attorneys that careless draftsmanship can complicate matters for their clients.

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