A Texas federal court has compelled a dispute over compliance with conditions precedent to arbitration, holding that the dispute arose out of an interpretation of contractual language within the scope of the arbitration agreement.

In SR Intern. Business Ins. Co. Ltd. v. Energy Future Holdings Corp., Civ. A. Nos. 3:07-CV-0908-L, 3:07-CV-0913-L, 2008 WL 657405 (N.D. Tex. Mar. 6, 2008), SR issued a reinsurance policy to Energy. The policy incorporated by reference an arbitration agreement. After a dispute arose, the parties proceeded to arbitration.

However, the parties disagreed as to whether all the conditions precedent to arbitration within the agreement had been met, including compliance with certain information requests. The parties also disagreed over whether the court or the arbitrator should determine whether those conditions had been met.

According to the Court, the language of the arbitration agreement indicated that any dispute arising out of or relating to the policy would be settled by arbitration, and that language was broad enough to encompass any dispute over conditions precedent. Since the dispute turned on an interpretation of the language within the policy and the incorporated arbitration agreement, the Court found the dispute within the scope of the agreement and the arbitrator's authority.