Abraham J. Gafni, Neutral, Mediator and Arbitrator with ADR Options. Courtesy photo

ADR

Contracting parties recognize that a lawsuit in court for breach of contract must generally be commenced before the statute of limitations had expired. But what if the claimant, pursuant to a mandatory arbitration provision, fails to demand arbitration of a dispute before the statute of limitations had expired on its substantive claim for breach of contract. Has the claimant waived its right to compel arbitration?

This issue was addressed recently by the Appellate Court of Maryland in Park Plus v. Palisades of Towson, 478 Md .35, 272 A. 3d 309 (2022). And, as will be noted, there have been differing opinions among the limited numbers of state courts, including Pennsylvania, that have addressed this very question.

The matter involved a contract for Park Plus to furnish and install a parking system in a luxury apartment building owned by Palisades. As the court pointed out, agreements to arbitrate are now commonplace and parties are free to structure them to suit their needs. Thus, they may specify how to initiate the arbitration process, the number and identity of arbitrators, the scope and extent of discovery, the locale of the proceeding and the extent to which the rules of evidence may apply. Nonetheless, they often fail to recognize that by creating their own procedures they are, in effect, "agreeing to curtail the role that courts may play in resolving their dispute."