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A federal district court in Puerto Rico held that it would not compel arbitration on the assumption that the parties meant to extend an arbitration agreement from one distribution deal into a second, even though it was effectively the same deal between the same parties.
In Colorama Paints & Equipment, Inc. v. Akzo Nobel Coatings, Inc., No. 06-1904(JAF), 2007 WL 129057 (D.P.R. Jan. 12, 2007), the Court expressed "confusion" over Colorama's claim that the first distribution agreement, which contained the arbitration agreement, was not relevant to the present dispute, given its reliance upon that agreement for much of its case. Still, the Court agreed that arbitration should not be required when it is merely assumed, and not proven, that the arbitration clause from the original agreement was intended to extend to a subsequent deal.
Even though the language of the first agreement included a promise to arbitrate all disputes "arising during the term of this Agreement and thereafter," the Court determined that short of specific language or other evidence to indicate the intent of the parties to extend the arbitration agreement into a second deal, it could not compel arbitration on issues apparently arising exclusively under the latter agreement.
Given the Court's narrow reading of the language both agreements, parties who do in fact wish to extend the terms of an arbitration agreement from one contract to the next should include very explicit terms of intent.
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