2020 Georgia Code
Title 9 - Civil Practice
Chapter 9 - Arbitration
Article 1 - General Provisions
Part 1 - Arbitration Code
§ 9-9-2. Applicability; Exclusive Method

1. Part 3 of Article 2 of this chapter, as it existed prior to July 1, 1988, applies to agreements specified in subsection (b) of this Code section made between July 1, 1978, and July 1, 1988. This part applies to agreements specified in subsection (b) of this Code section made on or after July 1, 1988, and to disputes arising on or after July 1, 1988, in agreements specified in subsection (c) of this Code section.
2. Part 3 of Article 2 of this chapter, as it existed prior to July 1, 1988, shall apply to construction contracts, contracts of warranty on construction, and contracts involving the architectural or engineering design of any building or the design of alterations or additions thereto made between July 1, 1978, and July 1, 1988, and on and after July 1, 1988, this part shall apply as provided in subsection (a) of this Code section and shall provide the exclusive means by which agreements to arbitrate disputes arising under such contracts can be enforced.
3. This part shall apply to all disputes in which the parties thereto have agreed in writing to arbitrate and shall provide the exclusive means by which agreements to arbitrate disputes can be enforced, except the following, to which this part shall not apply:
   1. Agreements coming within the purview of Article 2 of this chapter, relating to arbitration of medical malpractice claims;
   2. Any collective bargaining agreements between employers and labor unions representing employees of such employers;
   3. Any contract of insurance, as defined in Code Section 33-1-2; provided, however, that nothing in this paragraph shall impair or prohibit the enforcement of or in any way invalidate an arbitration clause or provision in a contract between insurance companies;
   4. Any other subject matters currently covered by an arbitration statute;
   5. Any loan agreement or consumer financing agreement in which the amount of indebtedness is $25,000.00 or less at the time of execution;
   6. Any contract for the purchase of consumer goods, as defined in Title 11, the "Uniform Commercial Code," under subsection (1) of Code Section 11-2-105 and subsection (a) of Code Section 11-9-102;
   7. Any contract involving consumer acts or practices or involving consumer transactions as such terms are defined in subsection (a) of Code Section 10-1-392, relating to definitions in the "Fair Business Practices Act of 1975";
   8. Any sales agreement or loan agreement for the purchase or financing of residential real estate unless the clause agreeing to arbitrate is initialed by all signatories at the time of the execution of the agreement. This exception shall not restrict agreements between or among real estate brokers or agents;
   9. Any contract relating to terms and conditions of employment unless the clause agreeing to arbitrate is initialed by all signatories at the time of the execution of the agreement; or
   10. Any agreement to arbitrate future claims arising out of personal bodily injury or wrongful death based on tort.

(Code 1933, § 7-302, enacted by Ga. L. 1978, p. 2270, § 1; Ga. L. 1979, p. 393, § 1; Code 1981, §9-9-81; Code 1981, §9-9-2, as redesignated by Ga. L. 1988, p. 903, § 1; Ga. L. 1997, p. 1556, § 1; Ga. L. 2001, p. 362, § 25; Ga. L. 2009, p. 1001, § 1/HB 189; Ga. L. 2013, p. 141, § 9/HB 79; Ga. L. 2019, p. 337, § 1-94/SB 132.)

The 2009 amendment, effective July 1, 2009, deleted "paragraphs (2) and (3) of" preceding "subsection (a)" in the middle of paragraph (c)(7). See the Editor's notes for applicability.

The 2013 amendment, effective April 24, 2013, part of an Act to revise, modernize, and correct the Code, added "or" at the end of paragraph (c)(9).

The 2019 amendment, effective July 1, 2019, purported to delete "paragraph (1) of" preceding "Code Section 33-1-2" near the beginning of paragraph (c)(3); however, such deletion was effected in 2018 pursuant to a Code Commission note.

- Pursuant to Code Section 28-9-5, in 2018, "paragraph (1) of" was deleted following "as defined in" in paragraph (c)(3).

- Ga. L. 2009, p. 1001, § 6, not codified by the General Assembly, provides, in part, that the amendment to this Code section shall be applicable to all contracts for private collection of child support payments entered into on or after July 1, 2009.

- For annual survey of labor and employment law, see 56 Mercer L. Rev. 291 (2004). For annual survey of construction law, see 57 Mercer L. Rev. 79 (2005). For annual survey of insurance law, see 58 Mercer L. Rev. 181 (2006). For article, "Georgia Condominium Law: Beyond the Condominium Act," see 13 Ga. St. B.J. 24 (2007). For survey article on insurance law, see 59 Mercer L. Rev. 195 (2007). For survey article on real property law, see 60 Mercer L. Rev. 345 (2008). For survey article on trial practice and procedure, see 60 Mercer L. Rev. 397 (2008).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the provisions, decisions under former Code Section 9-9-81 are included in the annotations for this Code section.

- O.C.G.A. Pt. 1, A. 1, Ch. 9, T. 9 did not apply to an appraisal arising out of an appraisal clause in an insurance contract. Eberhardt v. Georgia Farm Bureau Mut. Ins. Co., 223 Ga. App. 478, 477 S.E.2d 907 (1996).

Federal Arbitration Act, 9 U.S.C. § 1 et seq., controlled over state law and policy with respect to signature requirements in arbitration agreements. Primerica Fin. Servs., Inc. v. Wise, 217 Ga. App. 36, 456 S.E.2d 631 (1995).

Where an arbitration clause in a sales contract for a mobile home incorporated the federal Arbitration Act, 9 U.S.C. § 1 et seq., it preempted the provision of O.C.G.A. § 9-9-2 making agreements to arbitrate disputes arising out of consumer transactions unenforceable. Pate v. Melvin Williams Manufactured Homes, Inc., 198 Bankr. 841 (Bankr. S.D. Ga. 1996).

State law and policy with respect to the signature requirement of O.C.G.A. § 9-9-2(c)(9) must yield to the paramount federal law where the arbitration agreement requires the Federal Arbitration Act, 9 U.S.C. § 1 et seq., to apply. Langfitt v. Jackson, 284 Ga. App. 628, 644 S.E.2d 460 (2007).

O.C.G.A. § 9-9-2(c)(9), requiring that arbitration clauses be separately initialed, and O.C.G.A. § 9-9-2(c)(10), exempting personal bodily injury claims from arbitration, were preempted by the Federal Arbitration Act, 9 U.S.C. § 1 et seq., in an employment dispute between an employee and a brokerage firm. Davidson v. A. G. Edwards & Sons, Inc., 324 Ga. App. 172, 748 S.E.2d 300 (2013).

- When a seller of companies challenged a covenant not to compete and an arbitration clause in the purchase agreement, O.C.G.A. § 9-9-2 did not govern the agreement between the seller and the purchaser because the seller and purchaser did not share an employer-employee relationship. Weiner v. Tootsie Roll Indus., F.3d (11th Cir. Feb. 2, 2011)(Unpublished).

- Georgia-based investment company's argument that an arbitration agreement was unenforceable under O.C.G.A. § 9-9-2 failed, as Congress's adoption of the Convention on the Recognition of Foreign Arbitral Awards, which expresses a strong international policy in favor of enforcing commercial arbitration agreements and concomitantly limits the affirmative defenses to only those universally recognized under the Convention, supersedes state-based anti-arbitration defenses otherwise available in the domestic context by operation of the McCarran-Ferguson Act. Goshawk Dedicated Ltd. v. Portsmouth Settlement Co. I, Inc., 466 F. Supp. 2d 1293 (N.D. Ga. 2006).

- Trial court erred in refusing to compel arbitration as to all counts of buyers' complaint against a seller to recover damages for construction defects in the buyers' new home because the claim the buyers asserted under the Fair Business Practices Act of 1975, O.C.G.A. § 10-1-390 et seq., was covered by the arbitration clause of the parties' agreement since the arbitration clause of the agreement was specifically included within the ambit of the Georgia Arbitration Code (GAC) by O.C.G.A. § 9-9-2(c)(8) when the parties initialed the arbitration clause as required by the GAC; because the GAC applied to the agreement's arbitration clause by reason of § 9-9-2(c)(8), the arbitration clause was not excluded from the GAC by the "consumer transactions" exception of O.C.G.A. § 9-9-2(c)(7). Order Homes, LLC v. Iverson, 300 Ga. App. 332, 685 S.E.2d 304 (2009).

- The federal Arbitration Act, 9 U.S.C. § 1 et seq., did not preempt application of the Georgia Arbitration Code in an action involving an agreement covering employment of a doctor by a Georgia professional corporation. Columbus Anesthesia Group v. Kutzner, 218 Ga. App. 51, 459 S.E.2d 422 (1995).

Denial of a title insurer's motion to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., was upheld, as under 15 U.S.C. § 1012(b) of the McCarran-Ferguson Act, O.C.G.A. § 9-9-2(c) of the Georgia Arbitration Code (GAC) was a law for the purpose of regulating the business of insurance and not preempted by the FAA; inter alia, the GAC affected the insurer-insured relationship by invalidating the parties' chosen mode of contract enforcement, affected the transferring or spreading of risk by introducing the possibility of jury verdicts, regulated an integral part of the parties' relationship by subjecting all policy disputes to a possible jury trial, and applied only to the insurance industry. McKnight v. Chicago Title Ins. Co., 358 F.3d 854 (11th Cir. 2004).

- A sanitary landfill may be likened to a long-term construction project in that most aspects of conventional construction activity are undertaken; in order for a sanitary landfill to be operated in compliance with state and federal laws and regulations, in a sense it must be continually under construction. Therefore, a contract in which one agrees to operate a landfill in compliance with applicable state and federal laws and regulations is a "construction contract" within the ordinary meaning of the term and, therefore, within the intent of the Georgia Arbitration Code for Construction Contracts. Camp v. City of Columbus, 252 Ga. 120, 311 S.E.2d 834 (1984) (decided under former O.C.G.A. § 9-9-81).

Contract for demolition and salvage of two buildings was not a construction for the purposes of former O.C.G.A. § 9-9-80 et seq. Price & Sons Grading Co. v. Associated Iron & Metal Co., 171 Ga. App. 270, 319 S.E.2d 105 (1984) (decided under former O.C.G.A. § 9-9-81).

Agreements for the sale of new houses built by the seller are subject to the requirement that arbitration provisions be initialed by the parties. Pinnacle Constr. Co. v. Osborne, 218 Ga. App. 366, 460 S.E.2d 880 (1995).

Where homebuyers did not initial a sales contract's arbitration provision, it could not have been enforced, and even if it could have been enforced, the homebuyers did not agree in writing to submit to arbitration as required by the agreement; since the homebuyers, in their case against the homebuilder, did not sue pursuant to the warranty or sign any document agreeing to submit to the arbitration provision, that provision in the warranty applied only, if at all, through the sale agreement, which gave no notice of the warranty's mandatory arbitration provision, and the trial court erred in ordering the parties to arbitration. Laird v. Risbergs, 266 Ga. App. 107, 596 S.E.2d 412 (2004).

- It was not necessary that an arbitration provision in a home buyer's warranty be initialed for the provision to be enforceable. O.C.G.A. § 9-9-2(c)(8), requiring initialing, did not apply to home buyers' warranties; moreover, under a choice of law clause, the warranty was governed by the Federal Arbitration Act, which preempted Georgia's initialing requirement. Harrison v. Eberhardt, 287 Ga. App. 561, 651 S.E.2d 826 (2007).

A builder's warranty was not a home sale or loan contract and, therefore, subparagraph (c)(8) of O.C.G.A. § 9-9-2 did not apply to require the parties' initials beside the warranty's arbitration provision. Haynes v. Fincher, 241 Ga. App. 179, 525 S.E.2d 405 (1999).

- Though the parties entered a valid and binding agreement to arbitrate all disputes under the Georgia Arbitration Code, O.C.G.A. § 9-9-1 et seq., the Code was never intended to encompass personal injury or wrongful death actions; indeed O.C.G.A. § 9-9-2(c)(1) and (c)(10) expressly excluded such subject matter from coverage. Therefore, claims by home buyers' that the home seller negligently failed to construct, install, and inspect their house for carbon monoxide, which poisoned them and caused them tortious injury, was not subject to binding arbitration and the home seller's motion to compel such arbitration was properly denied. Dream Maker Constr., Inc. v. Murrell, 268 Ga. App. 721, 603 S.E.2d 72 (2004).

- Where, after litigation had commenced, the parties signed a consent order expressly agreeing to submit to binding arbitration, they waived their right to a jury trial upon entry of the order by the court, and reference in the order to a local rule of court did not render the arbitration of the parties' claims nonbinding. Ekereke v. Obong, 265 Ga. 728, 462 S.E.2d 372 (1995), rev'g, 215 Ga. App. 59, 453 S.E.2d 84 (1994).

Owner agreed to binding arbitration of a dispute concerning the construction of a house because, although the owner did not sign the warranty application, the owner signed a request for arbitration form, completed a "Construction Defects to Be Arbitrated Form," and signed an acknowledgment before participating in the arbitration that allowed the arbitrator to issue an award "in accordance with the arbitration provisions in the warranty booklet," which provided for binding arbitration. Witherington v. Adkins, 271 Ga. App. 837, 610 S.E.2d 561 (2005).

Trial court did not err in dismissing a spouse's claims against a builder on the ground that the spouse was equitably estopped from asserting claims for negligent construction and breach of warranty since the spouse was subject to the arbitration clause contained in a purchase-and-sale agreement the other spouse entered into with the builder because the claims of negligent construction and breach of warranty arose under, and presumed the existence of, the purchase-and-sale agreement, and the claims were so intertwined with the other spouse's claims against the builder that the spouse was estopped from avoiding arbitration. Moreover, the husband and wife asserted the same claims against the builders, thus requiring the spouse to assert the spouse's claims in the same forum as the husband eliminated the potential for varying decisions, discreditable to the administration of justice. Helms v. Franklin Builders, Inc., 305 Ga. App. 863, 700 S.E.2d 609 (2010).

- Where a stipulation in a home building agreement called for submission to arbitration of disputes relating to construction of the home, the arbitrator was without any authority to arbitrate any issue relating to conveyance of the property. Goodrich v. Southland Homes Corp., 214 Ga. App. 790, 449 S.E.2d 154 (1994).

A trial court did not err in dismissing a complaint, which sought to try the issues of breach of fiduciary duty asserted by plaintiffs, as the parties, at least implicitly, if not expressly, agreed to submit the fiduciary duty claims to arbitration, which were thereafter denied by the arbitration award. Although plaintiffs initially sought to exclude the fiduciary duty claims from the arbitration, plaintiffs presented evidence on the elements of a breach of fiduciary duty and asserted that those claims were before the arbitrator. Ansley Marine Constr., Inc. v. Swanberg, 290 Ga. App. 388, 660 S.E.2d 6 (2008), cert. denied, No. S08C1260, 2008 Ga. LEXIS 673 (Ga. 2008).

- An agreement styled as a "Home Building Agreement" was a construction contract rather than a residential real estate contract and thus was subject to the Georgia Arbitration Code, O.C.G.A. § 9-9-1 et seq. Goodrich v. Southland Homes Corp., 214 Ga. App. 790, 449 S.E.2d 154 (1994).

- Because Georgia law invalidated an arbitration agreement in an insurance policy, the trial court did not err by denying the insured's motion seeking to compel arbitration and stay a suit. Georgia law was not preempted by federal law in this case. Cont'l Ins. Co. v. Equity Residential Props. Trust, 255 Ga. App. 445, 565 S.E.2d 603 (2002).

A provision in a state's arbitration code excepting insurance contracts is a law regulating the business of insurance for purposes of the McCarran-Ferguson Act, and O.C.G.A. § 9-9-2(c)(3) is a law enacted to regulate the business of insurance within the meaning of the McCarran-Ferguson Act; thus, O.C.G.A. § 9-9-2(c)(3) is excepted from preemption by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. McKnight v. Chicago Title Ins. Co., 358 F.3d 854 (11th Cir. 2004).

Based on the facts that selling memberships in automobile clubs was insurance under O.C.G.A. § 33-1-2(2) (now paragraph (4)) and that application of the Federal Arbitration Act (FAA), 9 USC §§ 1-16, would impair O.C.G.A. § 9-9-2(c)(3), the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015, preempted the FAA and prohibited enforcement of the parties' arbitration agreement. Love v. Money Tree, Inc., 279 Ga. 476, 614 S.E.2d 47 (2005).

Conclusion that the insured party's claims alleging fraud, breach of contract, and violations of the Georgia Racketeer Influenced and Corrupt Organizations Act, O.C.G.A. § 16-14-1 et seq., were rendered moot by application of the appraisal clause was contrary to law; this would have converted the appraisal clause into an arbitration clause, which would have been impermissible under O.C.G.A. § 9-9-2(c)(3) in contracts between insured parties and insurers. McGowan v. Progressive Preferred Ins. Co., 281 Ga. 169, 637 S.E.2d 27 (2006).

Though agreement between insurer and Chapter 11 debtor had a binding arbitration clause, insurer's motion to dismiss debtor's complaint seeking recovery of overpaid premiums to benefit bankruptcy estate was overruled because agreement was an "insurance contract" to which anti-arbitration provision in O.C.G.A. § 9-9-2(c)(3), which was enforceable per McCarran-Ferguson Act, 15 U.S.C. § 1012(b), applied. Davis v. Zurich Am. Ins. Co. (In re TFI Enters.), Bankr. (Bankr. M.D. Ga. Apr. 9, 2008).

O.C.G.A. § 9-9-2(c)(3) invalidates arbitration agreements in insurance contracts as defined in O.C.G.A. § 33-1-2, with the exception that it does not prohibit enforcement of arbitration agreements in contracts between insurance companies; simply stated, in Georgia a contract of insurance is not subject to arbitration unless the contract is between insurance companies. Davis v. Zurich Am. Ins. Co. (In re TFI Enters.), Bankr. (Bankr. M.D. Ga. Apr. 9, 2008).

- Regardless of whether the attorney violated an ethic's rule by entering into a mandatory arbitration clause in an engagement agreement without first apprising the company of advantages and disadvantages of arbitration, the clause was not void as against public policy as no court has held that such clause may never lawfully be included in an attorney-client contract. Innovative Images, LLC v. Summerville, Ga. , S.E.2d (Sept. 8, 2020).

- No prejudice resulted from failure of demand for arbitration to give notice of the right to seek a stay of arbitration where the party had notice of the arbitration hearing and participated therein without objection. Goodrich v. Southland Homes Corp., 214 Ga. App. 790, 449 S.E.2d 154 (1994).

- Although the shareholders' agreement involved in the action was executed in 1983, it contained a specific, written agreement to arbitrate as contemplated by subsection (c) of O.C.G.A. § 9-9-2 and, thus, the statutory arbitration provisions were binding on the parties. Weyant v. MacIntyre, 211 Ga. App. 281, 438 S.E.2d 640 (1993).

- The arbitration provision in an agreement establishing a doctor's ownership interests in a professional corporation, and including the terms and conditions of the doctor's employment, was unenforceable under the Georgia Arbitration Code, O.C.G.A. § 9-9-1 et seq. Columbus Anesthesia Group v. Kutzner, 218 Ga. App. 51, 459 S.E.2d 422 (1995).

- Although an arbitration provision in an employment agreement was found to be unenforceable because it was not initialed by all of the signatories, as required by O.C.G.A. § 9-9-2(c)(9), the remainder of the agreement was enforceable because it was severable from the arbitration clause; it was found that the contract was severable under O.C.G.A. § 13-1-8(a) because it contained multiple promises based upon multiple consideration. ISS Int'l Serv. Sys. v. Widmer, 264 Ga. App. 55, 589 S.E.2d 820 (2003).

- Trial court erred in finding that, in an asset management contract under which a manager was engaged to administer an owner's real estate assets, an arbitration provision could not be enforced because the parties had not initialed it, because the statutory provision requiring initialing, O.C.G.A. § 9-9-2(c)(9), only applied to employment contracts, and the parties' contract was not an employment contract because the manager was explicitly retained as an independent contractor. JOJA Partners, LLC v. Abrams Props., 262 Ga. App. 209, 585 S.E.2d 168 (2003).

- Health care facility's motion to compel arbitration of a child's wrongful death claim was properly denied. As a durable health care power of attorney a parent gave the child did not authorize the child to bind the parent to arbitration, the agreement to arbitrate signed by the child was unenforceable. Life Care Ctrs. of Am. v. Smith, 298 Ga. App. 739, 681 S.E.2d 182 (2009), cert. denied, No. S09C1873, 2010 Ga. LEXIS 165 (Ga. 2010).

Cited in Pickle v. Rayonier Forest Res., L.P., 282 Ga. App. 295, 638 S.E.2d 344 (2006); Summerville v. Innovative Images, LLC, 349 Ga. App. 592, 826 S.E.2d 391 (2019), cert. granted, No. S19C1026, 2019 Ga. LEXIS 861 (Ga. 2019), overruled on other grounds by Bowen v. Savoy, 308 Ga. 204, 839 S.E.2d 546 (2020).