According to a recent decision by the Alabama Court of Civil Appeals, the existence of an arbitration agreement is not a precondition to the entry of judgment on an arbitration award. Instead, the entry of judgment is mandatory but conditional, and the aggrieved party may challenge the conditional judgment by arguing that they never agreed to arbitrate.

In Credigy Receivable, Inc. v. Day, No. 2070091, 2008 WL 2942089 (Ala. Civ. App. Aug. 1, 2008), Credigy filed an arbitration claim against Day to collect the unpaid balance on an MBNA credit card. The arbitrator issued an award in favor of Credigy.

More than a year later, Credigy filed an application to enter judgment on the award pursuant to the Alabama Arbitration Act (the Act). In response, Day claimed that he never had an MBNA credit card. Based on this response, the trial court asked Credigy to produce a copy of Day’s credit card application. Credigy failed to produce an application, and as a result, the trial court dismissed the case and refused to enter judgment on the arbitration award.

On appeal, Credigy argued that the trial court erred in not entering judgment on the award because Day did not follow the procedure for challenging an arbitration award under the Act. The Court agreed that the trial court erred in not entering judgment on the award. Specifically, the Court found that section 6-6-2 of the Act required the trial court to enter judgment on the award.

Nevertheless, the Court found that other provisions of the Act would permit Day to challenge the award on the ground that he never agreed to arbitration. Specifically, according to the Court, judgment on the award would be conditional in accordance with Horton Homes, Inc. v. Shaner, No. 1061659, 2008 WL 2469364 (Ala., June 20, 2008), and despite this entry of a conditional judgment, Day could challenge the award pursuant to section 6-6-14 of the Act by arguing that he never agreed to arbitrate.

Based on its holding, the Court remanded the case with instructions to enter conditional judgment on the award and allow 30 days for Day to file a motion to vacate the award.

As this case illustrates, under Alabama law, the existence of an arbitration agreement is not a precondition to the entry of judgment on an arbitration award but is instead a basis for challenging the conditional judgment on an arbitration award.