Georgia Power Co. v. Cimarron Coal Corp.

The Georgia Power Company (plaintiff) and the Cimarron Coal Corporation (Cimarron) (defendant) entered into an agreement under which Georgia Power could purchase coal from Cimarron. The agreement set a base price per ton of coal, which was subject to adjustment from time to time. A specific provision in the agreement provided for adjustments due to gross inequities with the consent of both parties. Specifically, if there was a gross inequity due to unusual economic conditions that the parties did not contemplate, the parties could mutually consent to change the base price. Another provision in the agreement provided that the parties would submit unresolved disputes to arbitration. A few years after the parties executed the agreement, the price of coal in the United States rapidly rose. Cimarron sought to increase the base price under the gross-inequity provision, which Georgia Power repeatedly denied. Eventually, Cimarron informed Georgia Power that it would be increasing the base price of coal and would stop deliveries unless Georgia Power agreed to the increase or agreed to arbitrate the dispute. In response, Georgia Power sued Cimarron. Specifically, Georgia Power claimed that the base price could be increased under the gross-inequity provision only with Georgia Power’s consent and that the applicability of that provision was not arbitrable. Georgia Power argued that because the gross-inequity provision required consent of both parties, the application of that provision was not arbitrable. The trial court concluded that the agreement required arbitration of the dispute.