October 03, 2025|Articles/Op-eds, Publications
By Matthew DeVries
As a construction litigation lawyer, dispute resolution is a recurring issue. It starts before the project begins at the time of contract negotiation, where the parties decide whether to require litigation or arbitration of their disputes. During project performance, disputes can often be addressed formally or informally. And after the project is completed, the real process begins: discussions, mediation, arbitration or litigation?
The Tennessee Court of Appeals recently decided a case that shows how arbitration and litigation can overlap. In Carbon Fiber Recycling, LLC v. Spahn (Oct. 2, 2025), a Tennessee company sued one of its members for misusing confidential information. The company asked the court for damages, an injunction, and to expel the member from the business. The trial court dismissed the case, reasoning that the operating agreement required arbitration in Delaware.
On appeal, the court agreed in part and disagreed in part. It held that the claims for damages and expulsion had to go to arbitration because of the contract language. But it also held that the trial court was wrong to dissolve the temporary restraining order. Even though arbitration was required, the company could still go to court for injunctive relief to stop ongoing harm while the arbitration process moved forward.
This decision matters for contractors. Many construction contracts require arbitration for disputes. But arbitration provisions do not take away statutory rights that can only be enforced in court. For example, a contractor’s mechanic’s lien must be filed and enforced through the court system. Just as the company in this case was allowed to seek injunctive relief despite the arbitration clause, a contractor may still need to go to court to protect lien rights while other disputes are resolved in arbitration.
When negotiating contracts, contractors should:
- Recognize that arbitration clauses are enforceable, but they do not strip away lien rights.
- Understand that seeking injunctive relief or enforcing liens will still require court involvement.
- Ensure your contracts clarify the ability to seek judicial remedies when needed to preserve statutory rights.
The bottom line is that arbitration may control many disputes, but when it comes to statutory lien enforcement and urgent injunctive relief, Tennessee courts have made clear: you can still go to court.
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