In a recent decision from the District of Oregon, the court addressed a growing procedural flashpoint in construction: who decides whether multiple arbitrable claims between different parties should be heard in a single consolidated arbitration proceeding.
In Sacramento Drilling, Inc. v. National Casualty Company[1], Sacramento sought to arbitrate claims simultaneously against its general contractor, White Construction, and its builders risk insurer, National Casualty. National objected, insisting that its dispute with Sacramento—arising under a separate insurance policy—should be arbitrated independently and limited to contract claims. National argued that Sacramento’s subcontract-based claims against White should be resolved in a separate proceeding because they involved a different arbitration clause which had different arbitration procedures. The court disagreed with National, emphasizing that questions about how arbitrations are structured—such as consolidation—are procedural matters for the arbitrators to decide, not the courts.
While the parties all agreed the disputes were subject to arbitration clauses, National attempted to distinguish between who could be joined in arbitration and which claims were properly arbitrable. But the court clarified that where arbitration is conceded and the agreements are valid, “how” the arbitration proceeds—including the issue of joinder or consolidation—is presumptively for the arbitrators to decide. This approach follows the reasoning in Howsam v. Dean Witter Reynolds[2] and other federal decisions that categorize such questions as procedural, not jurisdictional.
This decision underscores a clear message: where parties have agreed to arbitrate, courts will defer to arbitrators to manage procedural issues—even when parties disagree on consolidation or scope. For contractors, insurers, and project owners navigating multi-party disputes, it’s a reminder that drafting arbitration clauses with clear joinder and consolidation language is critical. Absent express limitations, arbitrators will likely have wide discretion to determine whether disputes proceed together or separately.
[1] Sacramento Drilling, Inc. v. Nat’l Cas. Co., 3:23-CV-00889-AN, 2024 WL 3085069, at *4 (D. Or. June 20, 2024).
[2] Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002).