## Facts

- SSI contracted with the U.S. Army Corps of Engineers for work on the McCook Reservoir Project and subcontracted part of the work to Geo-Con, Inc. in 2000.
- The subcontract contained an arbitration clause covering any claim arising out of or related to the subcontract, and included restrictions on assignment.
- By 2003, the construction work was complete, but the parties had not resolved financial allocations under the subcontract.
- Geo-Con filed for bankruptcy; in 2003, Environmental Barrier Co., LLC (EBC) acquired most of Geo-Con’s assets, including the subcontract.
- In 2004, EBC asserted it succeeded to Geo-Con’s rights and demanded payment from SSI; SSI disputed owing money.
- EBC initiated arbitration under the subcontract’s arbitration clause after mediation failed.
- During arbitration, SSI participated on the merits, advanced inconsistent positions about EBC’s status, and asserted a counterclaim, but did not timely object that SSI had never agreed to arbitrate with EBC.
- The arbitrator awarded EBC $388,919.88.
- After SSI did not pay, EBC sought confirmation of the award; SSI sought vacatur or modification; the district court confirmed the award.

## Issues

1. Whether SSI waived any objection to arbitrability (including lack of an arbitration agreement with EBC) by fully participating in the arbitration without timely challenging the arbitrator’s authority.

## Decision

- The Seventh Circuit affirmed confirmation of the arbitration award.
- The court held SSI waived any arbitrability challenge by participating in arbitration on the merits, asserting a counterclaim, and failing to timely object that no agreement to arbitrate existed with EBC.
- Because SSI’s post-award challenge came too late and no valid statutory ground for vacatur or modification was shown, the award was confirmed.

## Legal Principles

- A party must timely raise objections to arbitrability; participation in arbitration without such objection can constitute waiver or forfeiture.
- Litigating the dispute on the merits in arbitration, including asserting counterclaims, supports a finding of waiver of later challenges to the arbitrator’s authority.
- Judicial review of arbitration awards under the Federal Arbitration Act is narrowly limited; absent a valid statutory basis (such as an arbitrator exceeding powers), courts confirm awards.

## Conclusion

SSI could not participate fully in arbitration with EBC and then, after losing, recast its earlier arguments into a belated arbitrability challenge; its failure to timely contest the arbitrator’s authority waived the objection, requiring confirmation of the award.


Envtl. Barrier Co. LLC v. Slurry Sys., Inc., 540 F.3d 598 (7th Cir. 2008)