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May 29, 1959


The opinion of the court was delivered by: FOLLMER

This matter is before the Court on motion of defendant for stay of action pending arbitration.

As grounds for the motion, defendant alleges that on March 8, 1955, plaintiff contracted with defendant for the construction of a portion of Pennsylvania Turnpike System; that the contract specifically provided for the arbitration of all claims for additional compensation; that on or about April 5, 1957, plaintiff submitted its claim for additional compensation to Chief Engineer of the Pennsylvania Turmpike Commission in the sum of $ 1,043,287.29; that thereafter, on or about October 2, 1958, the said Chief Engineer, pursuant to the contract, rendered his decision denying all but $ 500 of the claim and so notified plaintiff; that no application for submission of plaintiff's claim to arbitration has been made; that the instant suit was filed without first following the arbitration procedure as required by the contract.

 Plaintiff contends that the arbitration provisions of the contract have application only to disputes involving measurement and payment and the performance of the contract; that the claims of plaintiff, being admittedly for the agreed balance of the contract price and for damages resulting from defendant's breaches of contract, are not issues 'referable to arbitration.' Consequently, a stay may not be granted under either the Federal or Pennsylvania Arbitration Acts 9 U.S.C.A. § 1 et seq.; 5 P.S. § 161 et seq.

 Section 11 of the contract is captioned 'Measurement and Payment.' Paragraph 'H' of this section is captioned 'Arbitration' and reads as follows:

 'H. Arbitration. Neither the Contractor nor the Surety shall be entitled to present any claim or claims to the Commission or to the Chief Engineer of the Commission, either during the prosecution of the work or upon completion of the contract, for additional compensation for any work performed which was not covered by the approved drawings, specifications, or contract, or for any other cause, unless he or it shall have given the Commission or the Chief Engineer of the Commission due written notice of his or its intention to present such claim or claims as hereinafter designated; provided, that the Contractor or his surety shall not be denied the right to present any claim which is based on differences in measurements or errors in computations which were not disclosed until preparation of the final certificate.

 'The written notice as above-required must have been given to the Commission or to the Chief Engineer of the Commission prior to the time that the Contractor shall have performed such work or that portion thereof giving rise to the claim or claims for additional compensation; or shall have given to the Commission or to the Chief Engineer of the Commission, within ten (10) days from the date the Contractor was prevented (either directly or indirectly) by the Office of the Chief Engineer of the Commission, from performing any work provided by the Contract; or within ten (10) days from the happening of the event, thing, or occurrence giving rise to the alleged claim.

 'The Chief Engineer shall render his decision upon the claim in writing in due course, and when such decision has been served upon the Contractor he shall be deemed to have accepted the same unless he shall, within fifteen (15) days thereafter, have submitted the question, in the precise language it was presented to the Chief Engineer to a Board of Arbitration. Such Board of Arbitration shall consist of the Consulting Engineer as provided by the Trust Indenture, the Counsel of the Commission, and an Engineer who is the selection of the Contractor. Such questions shall be submitted to the Board in triplicate and shall conform in every detail with the information submitted to the Chief Engineer as above outlined. This Board, after such studies and/or hearings as it may deem advisable (proper notice of such hearings to be given the Contractor), shall submit its recommendations and decisions regarding all questions or disputes to the Pennsylvania Turnpike Commission and to the Contractor. This decision shall be final unless the Commission or the Contractor shall resubmit in writing, within thirty (30) days from such notice, any and all questions to the said Board for the purpose of developing additional facts to enable the Board to determine whether it should change its decision; and the decision of the Board (sic) upon such resubmitted questions, if any, shall again be reported to the Commission and to the Contractor.

 'The decision or opinion of the Board shall be final, binding, and conclusive upon the parties in the dispute, without exception or right of appeal; and all rights or right of any action at law or in equity, under and by virtue of the contract and all matters connected with it and relative thereto, are hereby expressly waived.'

 The Pennsylvania Arbitration Act of April 25, 1927, P.L. 381, as amended, 5 P.S. § 161 et seq., provides as follows:

 ' § 161. Validity of arbitration agreements

 'A provision in any written contract, except a contract for personal services, to settle by arbitration a controversy thereafter arising out of such contract, or out of the refusal to perform the whole or any part thereof, or an agreement in writing between two or more persons to submit to arbitration any controversy existing between them at the time of the agreement to submit, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

 ' § 162. Stay of proceedings in violation of agreement

 'If any suit or proceeding be brought upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall, on application of one of the parties, stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.'

 Counsel for plaintiff and counsel for defendant filed of record their Stipulation dated May 5, 1959, which ...

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