Texas’s public strategy is to reassure agreeable resolutions of disputes. To that end, Texas courts have the authority to oblige parties of an unresolved lawsuit to participate in mediation or some other form of alternative dispute resolution. However, the parties cannot be obliged to settle the dispute in mediation. The Texas General Arbitration Act authorizes Texas courts to do the following: (1) compel arbitration, (2) stay related judicial proceedings, (3) appoint arbitrators, (4) render judgment on the arbitration award, (5) prevent the destruction of records needed for arbitration, (6) require compliance by an adverse party or witness, and (7) issue subpoenas, notices or court process (Circo & Little, 2011).
The content of the Levco Construction, Inc. v. Cleveland Construction, Inc. case is as follows: Levco, a civil contractor from the State of Texas, revealed upon beginning the work that CCI, a general contractor from the State of Ohio, and Whole Foods, a grocery store company, had failed to acquire all required building certifications and that the construction design and plans were not comprehensive, so Levco was obliged to make plentiful changes. Levco made numerous appeals to adjust the range of the contracted-for work to comprise the new work, together with demands for extra time and reimbursements (Miller, 2015). Levco claims that CCI and Whole Foods declined to approve the changes Levco sought after. Levco also declares that CCI continually mistreated Levco with uncomfortable deadlines, affected Levco’s work under the Construction Contract, was unsuccessful to pay Levco for work it had done from July 2010 to April 2011, and it resulted in the wrongful termination of the contract in January 2011. Thus, Levco was incapable of paying its subcontractors, which caused liens to be filed against the Project. CCI demanded that Lake County, Ohio by the arbitration area. Levco rejected to execute arbitration in Ohio and passed a statute that allowed them to void out the state arbitration (Miller, Cross & Clarkson, 2010).
The Texas appellate court reversed the trial court, holding that the FAA preempts the Texas statute. The court established that CCI demonstrated, as a matter of law, the presence of a legal arbitration agreement, according to which CCI could force arbitration in Ohio (Miller & Cross, 2012).
After a thorough analysis of the case, it can be concluded that the court’s decision would affect business in the case where any state could pass a statute allowing void out-state arbitration. That is supported by the fact that permitting dispute arbitration outside state borders means recognizing the supremacy of federal law. The above means that businesses are forced to approve the in-state arbitration under the forestalled state laws or sacrifice the safety of their applications for registration. For most of the businesses arbitration outside of the state means loss of valuable resources such as time and money. In the particular case of Levco Construction, Inc. the company suffered major income losses, struggling to combine litigation with business demands, which resulted in the lost case.
Taking into consideration all the previously mentioned particularities, the arbitration of disputes at a site that is distant from the location of the business has to be considered biased, unfair or discriminatory. Several states (e.g. North Dakota, Washington, Michigan, California) adopted the law declining out of state arbitration and the government strives to adopt this particular law nationwide.
This paper describes a demonstration case and then carries out an analysis, which proves that the United States legal system is imperfect and has flaws that are still to be reviewed. Out-of-state litigation has lately become a stumbling block for legal administration and numerous businesses across the United States because the terms of an arbitration contract can bound the sorts of disputes that the parties decide to arbitrate and then the court will have to resolve the issue of arbitrability.
References
Circo, Carl J. & Little, Christopher H. (2011). A State-by-State Guide to Construction and Design Law: Current Statutes and Practices, Second Edition. (2nd ed.).: ABA Book Publisher.
Miller, Roger Leroy, Cross, Frank B. & Clarkson, Kenneth W. (2010). Business Law: Text and Cases. (13th ed.).: Cengage Learning.
Miller, Roger Leroy & Cross, Frank B. (2012). Cengage Advantage Books: Essentials of the Legal Environment. (4th ed.).: Cengage Learning.
Miller, Roger Leroy (2015). Business Law Today, Comprehensive: Text and Cases: Diverse, Ethical, Online, and Global Environment. (10th ed.). Arlington, TX: Institute for University Studies.