A Party Through Its Conduct Can Waive Contractual Right to Arbitrate

A party through its conduct can waive its contractual right to arbitrate. Schroeder v. 1000 West Lofts, LLC, 746 N.E.2d 294 (1st Dist. 2001). In considering a motion to stay a judicial proceeding and to compel arbitration under the Illinois Uniform Arbitration Act, the trial court must conduct a summary proceeding to determine whether the parties have entered into a written agreement to arbitrate the matter in dispute. In that proceeding, the court has discretion to determine whether a party's actions constituted waiver of its right to compel arbitration.

A contractual right to arbitrate can be waived when a party's conduct is found to be inconsistent with the arbitration clause, thereby evidencing that it has abandoned its right. The Court discussed several cases in which a party's actions were determined to constitute waiver, and several where waiver was not found. A motion to compel arbitration is a prayer for injunctive relief which is treated like a preliminary injunction or restraining order. The Court determined that a contractor's actions in engaging in discovery at the trial court level, opposing the condominium owner's earlier attempt to compel arbitration, and failing to file for arbitration when the case had been previously dismissed, constituted a waiver of its right to arbitrate. The Court also determined that the claims of each party were closely linked, and therefore a party's waiver of its right to arbitrate some claims constituted waiver of arbitration of its opponent's claims.

Contact: Steven M. Hartmann