## Facts

- Georgia Power Co. (buyer) and Cimarron Coal Corp. (seller) executed a ten-year coal supply agreement beginning January 1, 1970, with a base price of $4.03 per ton subject to contractual adjustments.
- The contract included formula-based price adjustments for specified cost categories and “governmental impositions.”
- The contract also included a “gross proven inequity” provision (Section 26.01) stating that inequities from unusual, unanticipated economic conditions “may be corrected by mutual consent,” with reciprocal documentary support to aid settlement.
- Section 26.01 further provided that neither party was relieved of contractual obligations merely because an inequity claim existed or the parties failed to agree on a correction.
- The contract contained a broad arbitration provision requiring submission of unresolved disputes to arbitration.
- After sharp coal price increases in 1973–74, Cimarron sought an additional price adjustment under Section 26.01 based on a claimed inequity between the contract price and market prices.
- Georgia Power refused further adjustment; Cimarron threatened unilateral price increases and suspension of deliveries unless Georgia Power accepted the increase or agreed to arbitrate.
- Georgia Power filed suit seeking declaratory and injunctive relief, asserting Section 26.01 required mutual consent and that disputes under that clause were not arbitrable.
- The district court held the contract remained in force, ordered the parties to arbitrate Cimarron’s Section 26.01 claim, and preserved performance pending arbitration; Georgia Power appealed and Cimarron cross-appealed on ancillary relief.

## Issues

1. Whether a dispute over a claimed price adjustment under a “gross inequities” clause allowing correction “by mutual consent” is subject to arbitration under a broadly worded arbitration provision.
2. Whether the court could compel arbitration while requiring continued contractual performance pending arbitration.

## Decision

- The Sixth Circuit held the Section 26.01 price-adjustment dispute fell within the contract’s arbitration clause and must be arbitrated.
- The court rejected the argument that the phrase “by mutual consent” implicitly excluded Section 26.01 disputes from arbitration.
- The court affirmed the district court’s order compelling arbitration and keeping the agreement in force, with only limited modification on collateral matters raised in the cross-appeal.

## Legal Principles

- Under the Federal Arbitration Act, broad arbitration clauses are construed to cover disputes arising under the agreement, and doubts about arbitrability are resolved in favor of arbitration absent a clear contractual exclusion.
- A contract provision contemplating negotiated resolution (including language referencing “mutual consent”) does not, without clear limiting language, bar arbitration of disputes about whether contractual standards are satisfied and what contractual remedy follows.
- Where a contract states that obligations continue despite an unresolved claim and failure to agree, a party may be required to continue performance while the dispute is resolved through the agreed dispute-resolution process.

## Conclusion

The court required arbitration of a coal price-adjustment dispute arising under a “gross inequities” clause and enforced continued performance pending arbitration, treating the clause as creating arbitrable contractual questions rather than a carve-out from arbitration.


Georgia Power Co. v. Cimarron Coal Corp., 526 F.2d 101 (6th Cir. 1975)