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Statute of Limitations not applicabe to arbitration agreement

In the case of Gannett Fleming Inc. v. Corman Construction Inc., the Maryland Court of Special Appeals determined that an arbitration demand was not time barred, although the demand was arguably beyond the Maryland three-year general statute of limitations.  The subjection contract had no express limitation period for initiating arbitration.  The Court noted that “the expiration of a statutory limitations period does not render a demand for arbitration untimely—and, thus, the right to arbitration waived—unless the parties provide for this in their arbitration agreement”.  p. 18.

The dispute was between two parties to a teaming agreement created to bid on a state government construction contract.  The teaming agreement contained no arbitration provision, but the successful bid resulted in a subcontract which contained a AAA arbitration provision using their Construction Industry Rules. p. 5.  The demand for arbitration was arguably filed more than three years after the cause of action accrued.

The Court determined that “in the absence of waiver or a specific deadline imposed by contract, a party” does not forfeit “the right to demand arbitration if the demand is not made within the limitations period which would apply if the claim were brought in an action at law”. p. 1.  Notwithstanding the inapplicability of the statute of limitations, an arbitration demand may be determined to be untimely for inappropriate delay, waiver or other basis, under standard contract interpretation principles.  Such an analysis is an issue of law for the court.  Citing The Redemptorist v. Coulthard Services Inc., 145 Md. App. 116 (2002), at p. 141, the Court held that “no Maryland court has found a party to have waived a right to arbitration due solely to delay; by itself, delay in demanding arbitration is not an “intentional relinquishment” of the right to arbitrate claims”. p. 19.

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