Reinsurance Focus

The Texas Supreme Court has held that a party waived its right to arbitrate by vigorously, and successfully, opposing a demand for arbitration, taking substantial discovery on virtually every issue in the case and taking a dispute to the eve of trial before reversing course and demanding arbitration. The court's opinion reverses the decision of the lower courts, which had allowed the change in tactics. The court found that a showing of prejudice was required to support a finding that the right to arbitration had been waived, and found that prejudice was present due to the unfairness of the change of position, and the delay, expense and damage to the opponent's legal position. The court was bothered by the fact that the process had been manipulated to gain an unfair tactical advantage. The facts were so extreme here, that the court found that to deny the proposition that the right to arbitrate had been waived would amount to a holding that a party could never waive its right to arbitrate through participating in a lawsuit in lieu of arbitration. Homes v. Cull, No. 05-882 (Tex. May 2, 2008).

This post written by Rollie Goss.