The Alabama Supreme Court Allows A Second Bite At The Arbitration Apple

Could a failure to participate in a court-ordered arbitration be enough to waive a party's right to arbitration?  A recent decision of the Alabama Supreme Court suggests it is not.

In 2010, Yan Chen entered into a lease agreement with Russell Realty to lease property located in Greenville, Alabama. The lease, drafted by Russell Realty, included an arbitration clause which provided that any dispute or controversy that arose out of the lease agreement must first be mediated, and if not resolved in mediation, then submitted to binding arbitration.

In June of 2012, Russell Realty sued Chen, and others, for breach of contract. After Chen failed to answer the complaint, Russell Realty filed a motion for default judgment. Chen then answered and later filed a motion to compel arbitration pursuant to the lease agreement. The trial court stayed all matters for 180 days pending the outcome of arbitration. None of the parties made any effort to seek arbitration during the stay.