Is the arbitration clause in our Virginia contract enforceable?
Yes on the face of the Virginia statute, which says in terms that it reaches agreements between employers and employees. Va. Code § 8.01-581.01 makes a written agreement to arbitrate an existing controversy, and a provision in a written contract to arbitrate a future controversy, "valid, enforceable and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract", and says the article "also applies to arbitration agreements between employers and employees or between their respective representatives unless otherwise provided in the agreement", adding that nothing in the chapter creates any right to arbitration over the employment of an officer or employee of the Commonwealth. On application showing such an agreement and the opposing party's refusal to arbitrate the court "shall order the parties to proceed with arbitration", trying the existence of the agreement summarily if it is denied (§ 8.01-581.02(A)). Federal law displaces only part of the state analysis, and in Amchem Products it did not produce arbitration: the Supreme Court of Virginia said its resolution was "governed in part by the Federal Arbitration Act" because the agreement "involved interstate commerce", and quoted the Act's "congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary", but on whether a dispute existed at all it had to "apply the substantive contract law of this Commonwealth", because a court decides whether a party agreed to arbitrate by "ordinary state-law principles that govern the formation of contracts", and it AFFIRMED the refusal to compel, holding "with positive assurance that no legally cognizable dispute exists that would subject the litigants to arbitration and, thus, there is nothing for an arbitrator to decide". Scope is a contract question ("The language of the contract determines whether a particular dispute is arbitrable" (Brush Arbor)), and a waiver contention can be raised, though Brush Arbor disposed of one in a footnote on the record before it: the builder "did not waive its right to seek arbitration". Brush Arbor also shows how far a broad clause reaches and how it came out: of a clause covering "[a]ny controversy or claim arising out of or relating to this contract, or the breach thereof", the Court said such language is "very broad in its coverage" and that "Broad language of this nature covers contract-generated or contract-related disputes between the parties however labeled", so even the owners' argument that the clause was IMPOSSIBLE to perform (the named forum had promulgated no rules) was itself for the arbitrator: "The answer is plainly yes. These are 'controvers[ies] arising out of or relating to' this contract, and, therefore, an arbitrator must resolve them." The Court reversed and remanded "for entry of an order directing the parties to proceed to arbitration". A 2026 article (2026, c. 490) now overlays consumer and employee pre-dispute clauses: where such an arbitration in a Virginia-connected transaction requires the drafting party to pay fees before the arbitration can proceed, the drafting party is in material breach, in default, and "deemed to have waived the right to compel such arbitration if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date" (§ 8.01-581.020(A)). The consequence for the consumer or employee is spelled out in § 8.01-581.020(C): on the drafting party's default they may withdraw the claim and proceed in court (where the court "shall impose sanctions on the drafting party"), or compel arbitration with the drafting party paying reasonable attorney fees and costs; and § 8.01-581.021(C) makes the article's requirements "material terms of any pre-dispute arbitration agreement transacted pursuant to Virginia contract law".
The trap
Three Virginia-specific traps. First, an employment arbitration agreement is not outside the Virginia act: § 8.01-581.01 says the article "also applies to arbitration agreements between employers and employees or between their respective representatives unless otherwise provided in the agreement". Second, the 2026 article's thirty-day fee clock runs against the DRAFTING PARTY, the company that put the clause in a contract with a consumer or an employee, and missing it forfeits the right to compel, so a clause that is perfectly drafted can still be lost at the invoice stage; the invoicing duty that sets that due date, and the article's civil penalty, fall on a "High-volume arbitration service provider", defined as one conducting "more than 100 arbitrations per calendar year that arise from a pre-dispute arbitration agreement involving a Virginia-connected transaction", and § 8.01-581.021(D) says nothing in the article is to be construed to preempt federal law. Third, in a contract for Virginia-located construction work entered into by a party whose principal place of business is in the Commonwealth, Va. Code § 8.01-262.1(B) makes an out-of-Commonwealth arbitration forum unenforceable and puts the proceedings in the county or city where the work is to be performed unless the parties agree elsewhere within Virginia.
20 authorities
- statuteVa. Code § 8.01-581.01enactment date not established
The words that state the rule
A written agreement to submit any existing controversy to arbitration or a provision in a written contract to submit to arbitration any controversy thereafter arising between the parties is valid, enforceable and irrevocable, except upon such grounds as exist at law or in equity for the revocation of any contract. This article also applies to arbitration agreements between employers and employees or between their respective representatives unless otherwise provided in the agreement; provided, however, that nothing in this chapter shall be construed to create any right to arbitration with respect to any controversy regarding the employment or terms and conditions of employment of any officer or employee of the Commonwealth.
- statuteVa. Code § 8.01-581.02enactment date not established
The words that state the rule
On application of a party showing an agreement described in § 8.01-581.01 , and the opposing party's refusal to arbitrate, the court shall order the parties to proceed with arbitration. However, if the opposing party denies the existence of the agreement to arbitrate, the court shall proceed summarily to the determination of the issue of the existence of an agreement and shall order arbitration only if found for the moving party.
- statuteVa. Code § 8.01-581.020enactment date not established
The words that state the rule
Where an arbitration in a Virginia-connected transaction requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs before the arbitration can proceed, such drafting party shall (i) be in material breach of the arbitration agreement; (ii) be in default of the arbitration; and (iii) be deemed to have waived the right to compel such arbitration if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date.
- statuteVa. Code § 8.01-581.017enactment date not established
The words that state the rule
"High-volume arbitration service provider" means any arbitration service provider that conducts more than 100 arbitrations per calendar year that arise from a pre-dispute arbitration agreement involving a Virginia-connected transaction.
- statuteVa. Code § 8.01-581.021enactment date not established
The words that state the rule
Nothing in this article shall be construed to preempt federal law governing arbitration but shall be construed to be consistent with such law to the maximum extent permitted. If any provision of this section is held invalid or unenforceable, the remaining provisions shall remain in full force and effect.
- statuteVa. Code § 8.01-262.1enactment date not established
The words that state the rule
The forum for any arbitration proceedings required in such a contract entered into on or after July 1, 1991, shall be in this Commonwealth. If the contract provides for arbitration proceedings outside the Commonwealth, such provision is unenforceable and arbitration proceedings shall be in the county or city where the work is to be performed, unless the parties agree to conduct the proceedings elsewhere within the Commonwealth. The enforceability of the remaining provisions of the arbitration agreement and the method of selecting a forum for the conduct of the arbitration proceedings are as provided in this Code, the Federal Arbitration Act, and any applicable rules of arbitration.
- case264 Va. 89Amchem Products, Inc. v. Newport News Circuit Court Asbestos CasesVa.decided 2002read it at the source ↗
The words that state the rule
The Federal Arbitration Act contains "a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of [§ 2 of the Act] is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act."
- case823 S.E.2d 249Brush Arbor Home Construction, LLC v. AlexanderVa.decided 2019read it at the source ↗
The words that state the rule
The language of the contract determines whether a particular dispute is arbitrable.
- case823 S.E.2d 249Brush Arbor Home Construction, LLC v. AlexanderVa.decided 2019read it at the source ↗
The words that state the rule
We also conclude that Brush Arbor did not waive its right to seek arbitration.
- statuteVa. Code § 8.01-581.020enactment date not established
The words that state the rule
C. If the drafting party materially breaches the arbitration agreement and is in default under subsection A, the employee or consumer may do either of the following: 1. Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction; or 2. Compel arbitration in which the drafting party shall pay reasonable attorney fees and costs related to the arbitration. If the consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party.
- statuteVa. Code § 8.01-581.021enactment date not established
The words that state the rule
C. The requirements of this article shall be incorporated as material terms of any pre-dispute arbitration agreement transacted pursuant to Virginia contract law.
- case823 S.E.2d 249Brush Arbor Home Construction, LLC v. AlexanderVa.decided 2019read it at the source ↗
The words that state the rule
The arbitration clause here states that “[a]ny controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration . . . .” We have described such language as “very broad in its coverage.” Id. at 426. “Broad language of this nature covers contract-generated or contract-related disputes between the parties however labeled.” McMullin v. Union Land & Mgmt. Co., 242 Va. 337, 341 (1991).
- case823 S.E.2d 249Brush Arbor Home Construction, LLC v. AlexanderVa.decided 2019read it at the source ↗
The words that state the rule
The straightforward question we must resolve is whether the parties’ disagreement over the interpretation of Article 12, as well as the application of the doctrine of impossibility to this article of the contract, are “controvers[ies] or claim[s] arising out of or relating to this contract, or the breach thereof.” The answer is plainly yes. These are “controvers[ies] arising out of or relating to” this contract, and, therefore, an arbitrator must resolve them. We hold that the circuit 4 court erred in concluding otherwise.
- case823 S.E.2d 249Brush Arbor Home Construction, LLC v. AlexanderVa.decided 2019read it at the source ↗
The words that state the rule
We will reverse the judgment of the circuit court and remand for entry of an order directing the parties to proceed to arbitration.
- statuteVa. Code § 8.01-262.1enactment date not established
The words that state the rule
A. Where a party whose principal place of business is in the Commonwealth enters into a contract on or after July 1, 1997, to design, manage construction of, construct, alter, repair, maintain, move, demolish, or excavate, or supply goods, equipment, or materials for the construction, alteration, repair, maintenance, movement, demolition, or excavation of a building, structure, appurtenance, road, bridge, or tunnel which is physically located in the Commonwealth, any cause of action arising under such contract may be brought in the jurisdiction where the construction project is located, or such other jurisdiction where the venue is proper under the provisions of this chapter. Any provision in the contract mandating that such action be brought in a location outside the Commonwealth shall be unenforceable.
- case264 Va. 89Amchem Products, Inc. v. Newport News Circuit Court Asbestos CasesVa.decided 2002read it at the source ↗
The words that state the rule
Our resolution of this appeal is governed in part by the Federal Arbitration Act because the Master Settlement Agreement, as modified by the October 2000 letter, "involved interstate commerce." Thus, we must apply the federal substantive law to determine whether the parties must submit to binding arbitration as required by the contract.
- case264 Va. 89Amchem Products, Inc. v. Newport News Circuit Court Asbestos CasesVa.decided 2002read it at the source ↗
The words that state the rule
However, in determining whether a contractual dispute exists that is subject to arbitration, we must review the language contained in the Master Settlement Agreement and the October 2000 modification to ascertain the meaning of these documents, and in making this determination, we must apply the substantive contract law of this Commonwealth. The question "[w]hether a party agreed to arbitrate a particular dispute is an issue for judicial determination to be decided as a matter of contract." Johnson v. Circuit City Stores, Inc., 148 F.3d 373, 377 (4th Cir. 1998); accord AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648-49 (1986); Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997). In making this determination, the courts should apply "ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)
- case264 Va. 89Amchem Products, Inc. v. Newport News Circuit Court Asbestos CasesVa.decided 2002read it at the source ↗
The words that state the rule
Thus, reiterating, we hold that the circuit court did not err in denying the defendants' request to arbitrate because, applying the federal law and the Federal Arbitration Act, we conclude with positive assurance that no legally cognizable dispute exists that would subject the litigants to arbitration and, thus, there is nothing for an arbitrator to decide.
- statuteVa. Code § 8.01-581.020enactment date not established
The words that state the rule
B. After a consumer meets the filing requirements necessary to initiate an arbitration with a high-volume arbitration service provider, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all parties to the arbitration. The invoice shall (i) be provided in its entirety; (ii) state the full amount owed and the date that payment is due; (iii) include estimated future charges through the completion of the arbitration; and (iv) be sent to all parties by the same method of delivery on the same day. Absent an express provision in the arbitration agreement stating the number of days within which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt.
- statuteVa. Code § 8.01-581.021enactment date not established
The words that state the rule
B. Upon a determination that a high-volume arbitration service provider has failed to comply with the provisions of this article, the State Corporation Commission may impose a civil penalty in an amount not to exceed $10,000 per violation.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.