Does the Statute of Limitations Apply to My Arbitration Agreement?

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It seems like a deceivingly simple question as most attorneys assume statutes of limitations apply to all proceedings, despite the forum. However, this is not the case. The answer to whether a statute of limitations applies to your arbitration claim depends on the following questions:

  1. Has your state legislature or court decided that statutes of limitations apply to arbitration proceedings?
  2. Does your arbitration agreement impose time bars independent of state and federal law?

State Jurisprudence

The Federal Arbitration Act (FAA) is the federal law that provides substantive authority on arbitration proceedings. The Revised Uniform Arbitration Act (RUAA) is a model statute that twenty two states have adopted to govern arbitrations. Notably, neither of these acts impose statutes of limitations. Parties must therefore look to other state laws to determine whether there are time bars to their arbitration agreement.

The chart below details which states apply statutes of limitations to arbitration agreements. As you can see from the number of states listed, a majority of states have not addressed the issue.

  Yes   No SOL Application Within Arbitrator Discretion
Michigan Florida Washington Connecticut Maine Maryland Massachusetts Minnesota North Carolina Ohio Georgia New York Pennsylvania

“Yes” States (Michigan, Florida, and Washington)

In Washington, the legislature enacted a law which expressly applies statutes of limitations to arbitrations.[1] In Florida and Michigan, the state supreme courts have held that statutes of limitations apply to arbitration agreements.[2] Interestingly, both courts cited concern for defendants’ exposure to untimely claims in their reasoning.

“No” States (Connecticut, Maine, Maryland, Massachusetts, Minnesota, North Carolina, Ohio)

All statutes of limitations inherently involve the same mechanism—a statute invoking the time bar. As a result, courts which find that statutes of limitation do not apply to arbitration agreements engage in statutory interpretation to come to their conclusion. The common theme of these “no” decisions is conclusion that arbitrations are not court proceedings. Specifically, these courts find that a statute of limitations’ use of the phrase “action, civil action, or action at law” do not apply to out-of-court arbitrations. For example, in Gannett Fleming, Inc. v. Corman Construction, Inc., the Maryland Court of Appeals held that the statute of limitation for written contracts applied “only to civil actions at law” and a civil action does not include arbitration.[3] The court explained that the term “action” within the statute of limitation was defined as “seek[ing] to enforce any right in a court.”[4] It concluded that an arbitral tribunal is not a court.[5] A full list of case law from the remaining “no” states is listed below.[6]

“Arbitrator’s Discretion” States (Georgia, New York, and Pennsylvania)

Georgia statutory law allows a party to assert the statute of limitations defense and the arbitrator may, in their sole discretion, decide whether to apply the time bar.[7] New York statutory law is unique because it vests arbitrators with authority to unilaterally raise and decide whether a statute of limitation should apply. The law allows parties to raise the statute of limitations as a bar to arbitration but if no application is made “it is left to the discretion of the arbitrator whether or not to apply the bar.”[8]

In Pennsylvania, an arbitrator has the common law right to decide whether the statute of limitation applies to an arbitration agreement. [9] In Morse, the arbitration agreement and arbitrating body rules were silent as to whether the arbitrator could rule on a statute of limitations issue.[10] Nonetheless, the court held that the arbitrator possessed the authority because of the broad arbitration clause.[11] The clause stated “[a]ny dispute, claim or controversy arising out of this Agreement … including … the scope and applicability of the agreement to arbitrate … shall by determined by an arbitration before [JAMS].”[12] The court ruled that the term any included the statute of limitations.[13]

Text of the Arbitration Agreement

The second factor that can determine the applicability of a statute of limitations to your arbitration agreement is, of course, the language of the agreement itself. Remember, an arbitration agreement is a contract. And contracting parties have the ability to include time bars in arbitration provisions that are unique from those imposed by statutes of limitation.

When reviewing the text of your arbitration agreement, ask:

  • How broad is the arbitration clause?
  • Are time bars expressly stated?
  • Do the arbitrating body rules (ex: JAMS, AAA) impose a time bar?
  • Does the choice of law provision select a state that has applicable common or statutory laws?

Conclusion

Only thirteen states have expressly decided whether statutes of limitations apply to arbitration agreements. If your state is not on the list or you have a question regarding the above, please contact an attorney at Cozen O’Connor for personalized expertise. Our full-service firm has thirty offices worldwide and can assist with all stages of arbitration, from drafting of arbitration provisions to representation in arbitration proceedings.


[1] Wash. Rev. Code § 7.04A.090(3) (2016).

[2] Raymond James Financial Services, Inc. v. Phillips, 126 So. 3d 186 (Fla. 2013); Nielsen v. Barnett Nielsen v. Butterworth Hospital, 440 Mich. 1 (1992).

[3] 243 Md. App. 376, 397, 220 A.3d 411, 424 (2019).

[4] Id.

[5] Id.

[6] Connecticut: Bobbin v. Sail the Sounds, LLC, 153 Conn. App. 716, 721, 107 A.3d 414, 417 (2014) (“arbitration proceeding is not civil action within bar of statute of limitations.” (internal citation omitted)); Maine: Lewiston Firefighters Ass’n v. City of Lewiston, 354 A.2d 154, 167 (Me. 1976) (“[a]rbitration is not an action at law and the statute [of limitation] is not, therefore an automatic bar to the [f]irefighter’s recovery”); Massachusetts: Carpenter v. Pomerantz, 36 Mass. App. Ct. 627, 631, 634 N.E.2d 587, 590 (1994)(“the limitation period provided for in G.L. c. 260, § 2, as amended by St.1948, c. 274, § 1, is inapplicable to demands for arbitration.”); Minnesota: Vaubel Farms, Inc. v. Shelby Farmers Mut., 679 N.W.2d 407, 412 (Minn. Ct. App. 2004) (“arbitration proceedings are not ‘suits’ because they are not proceedings in a court of law, the district court properly determined that the two-year contractual limitation for “suits” is inapplicable to this arbitration proceeding.”); North Carolina: Cameron v. Griffith, 91 N.C. App. 164, 165, 370 S.E.2d 704, 704 (1988) (holding that the four-year statute of limitations did not apply because “an arbitration is neither an ‘action’ nor a ‘judicial proceeding,’ but a non-judicial, out-of-court proceeding which makes an action or judicial proceeding unnecessary.”); Ohio: NCR Corp. v. CVS Liquor Control, Inc., 874 F. Supp. 168, 172 (S.D. Ohio 1993)( “[the] statute of limitations is to bar an action at law, not arbitration.”).

[7] Ga. Code Ann. § 9-9-5(b) (2016).

[8] N.Y. C.P.L.R. § 7502(b) (McKinney 2016).

[9] Morse v. Fisher Asset Mgmt., LLC, 2019 PA Super 78, 206 A.3d 521, 528 (2019), see Merchants Mut. Ins. Co. v. American Arbitration Ass’n, 433 Pa. 250, 248 A.2d 842[, 844] (Pa. 1969) (where arbitration clause provided that arbitrator has the power to consider all issues, the issue of the applicability of the statute of limitations came within the arbitrator’s purview), see also Woodward Heating & Air Conditioning Co. v. American Arbitration Ass’n, 259 Pa.Super. 460, 393 A.2d 917, 920, n.4 (Pa. Super. 1978) (“whether a claim is barred by the statute of limitations should be determined by arbitration”).

[10] Id. at 523-24, 528.

[11] Id. at 528.

[12] Id. at 527.

[13] Id. at 528.

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