March 16, 2017 Articles

Third Circuit: Futility Avoids Arbitration Waiver

By Sheila J. Carpenter

Parties to a contract containing an arbitration clause who find themselves in litigation generally must promptly demand arbitration, and bring a motion to compel if needed, or they may waive their right to arbitration, especially if a party opposing arbitration can show prejudice from the delay. This rule prevents the waste of resources likely to occur if the parties litigate for months or years and then one party demands to start anew in arbitration. However, there are some exceptions to the waiver doctrine. One is that an arbitration demand earlier in the case would have been futile.

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