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Unless parties to an arbitration agreement specify that arbitration will not be binding, the arbitrator’s award is binding on the parties, a California state court held.
In Massa v. Ruskin, No. A110704, 2006 WL 2474885 (Cal. App. Aug. 29, 2006), Ruskin hired general contractor Massa to build a home. Massa finished the home and Ruskin refused to pay part of the contracted price.
Pursuant to an arbitration clause in their contract, the parties submitted their dispute to arbitration. The arbitrator issued an award in Massa’s favor, and Ruskin argued that the parties had not agreed to binding arbitration and therefore he was not bound to pay the amount that the arbitrator awarded Massa.
The parties’ agreement did not specify that arbitration was to be binding. However, the Court held that the arbitration was binding because “in the absence of a clear indication that the parties intend arbitration not to be binding, they will be bound by the arbitrator’s decision.”
Therefore, even though the parties were not required by their contract to submit their dispute to arbitration, since they decided to do so and never specifically stated that the arbitration would not be binding, the Court confirmed the arbitrator’s award.
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