Moses H. Cone Memorial Hospital v. Mercury Construction Corp.

Moses H. Cone Memorial Hospital v. Mercury Construction Corp. was a landmark case decided by the United States Supreme Court that had significant implications for the field of arbitration in the United States. This case is often cited in discussions about the enforceability of arbitration agreements and the role of federal courts in disputes that are subject to arbitration under the Federal Arbitration Act (FAA).

Background

The dispute originated from a construction contract between Moses H. Cone Memorial Hospital (the Hospital) and Mercury Construction Corporation (Mercury). The contract included an arbitration clause, which is a common feature in commercial contracts where the parties agree to resolve disputes through arbitration rather than litigation. A disagreement arose between the two parties over the construction work, leading to Mercury seeking arbitration as stipulated in the contract.

Case History

The Hospital sought to prevent the arbitration from proceeding by filing a lawsuit in a federal district court, arguing that the dispute should be resolved through litigation rather than arbitration. The district court decided in favor of arbitration, but the decision was appealed. The case eventually reached the United States Supreme Court, which had to determine whether the dispute should be resolved through arbitration, as per the contract, or if the Hospital could litigate the dispute in federal court.

Supreme Court Decision

In a landmark decision, the Supreme Court ruled in favor of Mercury Construction Corp., upholding the arbitration agreement. The Court emphasized the importance of the Federal Arbitration Act, which expresses a strong federal policy favoring arbitration agreements. The decision underscored the principle that arbitration agreements must be enforced according to their terms unless there are grounds for revocation of the contract.

Implications

The ruling in Moses H. Cone Memorial Hospital v. Mercury Construction Corp. has had a profound impact on the enforcement of arbitration agreements in the United States. It affirmed the federal policy that arbitration is a favored means of dispute resolution and that federal courts should play a limited role in disputes that parties have agreed to arbitrate. This case is frequently cited in subsequent arbitration disputes and has influenced the development of arbitration law in the United States.

See Also

• Arbitration in the United States
• Federal Arbitration Act
• United States Supreme Court cases