In Nebraska, parties can contractually agree to submit their disputes to arbitration, bypassing litigation in state or federal courts. However, what happens when one party initiates an arbitration, but the claims in the arbitration fall outside the agreement to arbitrate?
In a matter of first impression, in Garlock v. 3DS Properties, 303 Neb. 521, 930 N.W.2d 503 (2019) Nebraska’s Supreme Court addressed whether a party’s participation in an arbitration proceeding, without objection, was a waiver of the party’s right to subsequently challenge arbitrability under state law.
The Nebraska Supreme Court considered other courts which have previously addressed this issue. “As a general rule, these courts hold that voluntary participation in an arbitration proceeding on the merits of a dispute will result in a waiver or forfeiture of the right to later challenge arbitrability. In other words, a party may not voluntarily submit a dispute to arbitration and, after an unfavorable result, petition the courts to find the dispute was not arbitrable. If, however, a party clearly and explicitly makes known to the arbitrator, prior to a hearing on the merits, that he or she objects to the arbitrability of an issue, that party’s participation in the arbitration will not preclude a later judicial challenge to arbitrability."
Based upon the facts before the Supreme Court, the Garlocks did not properly preserve their objection to arbitration. While the specific facts of your contract, and state and federal statutes, can affect the objection to arbitration, the attorneys at Goosmann Law Firm have the experience to examine your contract and advise you on the options available to object to your arbitration.