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A court cannot compel arbitration of a dispute when the underlying agreement refers generally to alternative dispute resolution procedures instead of referring to arbitration, according to a federal district court in Mississippi.
In Storm Reconstruction Services, Inc. v. Kellogg Brown & Root Services, Inc., Civ. A. No. 1:06CV726-LG-JMR, 2007 WL 3124559 (S.D. Miss. Oct. 24, 2007), Kellogg subcontracted with Storm Reconstruction Services (SRS) to provide clean-up services. SRS allegedly did not comply with minimum wage requirements under federal law, and Kellogg demanded damages. SRS instead sought a declaratory judgment with the court that it was not liable for the wage damages. Kellogg moved to compel arbitration of the claim.
The contract between SRS and Kellogg indicated that the parties would attempt to resolve any contract dispute "in good faith… under the agreed Alternate Dispute Resolution (ADR) procedures." The contract did state that Center for Public Resources (CPR) procedures would be considered for that purpose, the contract never used the term "arbitration."
The Court found that there was no agreement to arbitrate between the parties, and denied Kellogg's motion to compel. It found that the contract "merely provide[d] that the parties will attempt to resolve disputes using ADR, and that ADR will be a prerequisite to litigation." To the Court, this indicated that the parties "intended to engage in non-binding ADR, such as mediation, rather than binding arbitration."
Kellogg argued that the contract's reference to CPR procedures demonstrated the intent to arbitrate, but the Court noted that CPR administered many types of ADR procedures other than arbitration, and held the reference was not specific enough to constitute an agreement to arbitrate.
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