Magazine article Dispute Resolution Journal

Construction: Preemption of State Notice Provision

Magazine article Dispute Resolution Journal

Construction: Preemption of State Notice Provision

Article excerpt

The South Carolina Court of Appeals held that the Federal Arbitration Act preempted South Carolina's notice requirement for arbitration agreements. The fact that the design contemplated use of out-of-state suppliers and contractors established that the contract involved "interstate commerce."

Blanton contracted to provide design, drawing, and architectural services to Stathos in the construction of a restaurant in Seneca, South Carolina. The contract was a standard American Institute of Architects contract, which contained an arbitration clause. Blanton began work and consulted with several out-of-state companies regarding specifications of components for the project. However, Stathos terminated her contract prior to Blanton's completion of her contractual duties. Neither procurement of materials nor construction had begun at the time of the breach of contract.

Blanton commenced an arbitration but Stathos did not participate in it. The arbitrator awarded Blanton's requested damages of $9,669.80 and assessed Stathos $243.98 in arbitrator's fees. Blanton moved to confirm the award.

The Circuit Court granted the motion and confirmed the award. Stathos appealed, contending that the AIA contract was not enforceable under South Carolina's Arbitration Act because it did not contain the required notice provision.

The South Carolina Court of Appeals agreed that the contract did not satisfy the notice requirements of S.C. Code Ann. [sec] 15-48-10(a), which requires a notice of arbitration to be typed in underlined capital letters, or rubber-stamped prominently, on the first page of the contract. …

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