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Actions of company vis-à-vis arbitration agreement influence appellate court’s decision to uphold aw

Earlier this month, the Superior Court of Pennsylvania—the state’s intermediate appellate court—upheld a decision made by a lower court upholding an arbitration award of over $9,000. That award reportedly went to a uniform and linen supply company who had contracted with a muffler and brake company.  The linen company ended up returning the muffler company’s check due to insufficient funds and requested instead payment by certified check or cash.

The linen company accused the muffler company of failing to fully pay for its services and for breaching an agreement they had reached. Under that agreement, the parties had also agreed to binding arbitration in the event of a dispute. At arbitration, it was determined that the companies had entered into a valid contract and ruled in favor of the linen company.

The arbitration decision was appealed to the Superior Court on the grounds that the defendant believed it had not signed the original underlying contract. This argument was based on the fact that the agreement was signed by the muffler company’s immediate predecessor company, which had essentially the same name. The court, however, found that the muffler company complied with the terms of the agreement up until arbitration and even appealed to the terms of the contract in negotiations with the linen company and in the initial stages of the arbitration process.

The bottom line is that the court upheld the denial of the muffler and brake company’s petition to vacate the arbitration award. The case is an interesting study in how the actions of parties to an arbitration agreement can influence  their ability to vacate an unfavorable arbitration award later on.

In a future post, we’ll look a bit more at this topic and state law concerning vacating arbitration awards. 

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