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AGC PROTECTS CONTRACTORS' RIGHT TO REQUIRE ARBITRATION

March 13, 2007

Washington, D.C.— Siding with The Associated General Contractors of America (AGC) and its Greater Florida Chapter, the Court of Appeal for the First District of Florida has held that the arbitration clauses embedded in standard contracts widely used throughout the construction industry survive contract termination. The court found it “well established that the duty to arbitrate does not necessarily end when a contract is terminated” and announced that, at least in Florida, such clauses apply to “disputes arising after the cancellation of the underlying contract unless . . . specifically excluded. . . . .”

“Both project owners and their contractors are entitled to know what they are agreeing to do,” said AGC CEO Stephen E. Sandherr. “We cannot have the courts reinterpreting standard language which owners and their contractors have chosen specifically to stabilize their relationship.”

Before the court was the 1997 version of the “A201,” a standard form construction contract that the American Institute of Architects (AIA) has published and that continues to govern the construction of many projects. The case arose very near the contractor’s completion of the project that its contract covered, and after the contractor had secured a certificate of occupancy. At that late point in the process, the owner unilaterally terminated the contract and then filed a lawsuit against the contractor. In response, the latter filed a motion to compel the owner to arbitrate its dispute, and to dismiss or stay the lawsuit pending arbitration. The trial court denied the contractors motion. The appellate court has now reversed the lower court’s decision.

In the friend-of-the-court brief filed in The Auchter Company v. Fouad Zagloul, AGC and its chapter had stressed that the trial court’s “[a] misinterpretation of well worn language” threatened to throw “an enormous number of contracts incorporating A201 into a state of uncertainty.”

The Associated General Contractors of America (AGC) is the largest and oldest national construction trade association in the United States. AGC represents more than 32,000 firms, including 7,000 of America’s leading general contractors, and over 11,000 specialty-contracting firms. More than 13,000 service providers and suppliers are associated with AGC through a nationwide network of chapters. Visit the AGC Web site at www.agc.org. AGC members are "Building Your Quality of Life.”

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