Mediation Arbitration Specialist

On September 27th and again on December 5th, I will be facilitating an American Arbitration Association University course entitled "Managing the Arbitration Process for Efficiency and Economy Following the Preliminary Hearing". This is an exciting interaction program format designed for the exchange of knowledge and experiences among and between the participants so that the learing experierce would transcend the knowledge of the presenter alone brings to the discussion. I urge those arbitration providers to all consider joining me at this great program. For further information contact Jan Holdinski at [email protected]

Support the Passage of the Revised Uniform Arbitration Act ( Senate Bill 903)

On May 17, 2012, the Michigan Senate passed House Bill No. 903, the Revised Uniform Arbitration Act ("RUAA") by a vote of 37 to 1.  This Act is now pending before the Michigan House Judiciary Committee and House of Representatives.  The objective of the RUAA is to modernize the Michigan Arbitration Act ("MMA") which was adopted in 1961 and which provided for the enforceability of executor agreements to arbitrate.  The RUAA enhances the MMA by including important procedural protections not part of the original regulatory scheme.  Some of the key protections include notice requirements for initiating arbitration (§2), strengthening the disclosure process by requiring arbitrators to disclose known financial interests or personal relationships that could affect their impartiality (§12), authorizing the arbitrator to limit or permit discovery (§17), clarifying the role of courts and arbitrators in determining arbitrability (§6) and clarifying whether or not punitive damages are or are not awardable and if so, when and how (§21).  This Bill does not affect domestic relations arbitration since a new domestic arbitration standard was adopted in 2001. 

The MMA was a "bare bones" statute that had not been modified since its adoption in 1961.  Generally, gaps in the statute were filled in by case law, which, in many cases, were inconsistent, unknown to the users, and for that matter the arbitrators.  The goal of this new statute was to design a statute that would preserve the efficiencies of arbitration, incorporate the pertinent law, and facilitate the use of arbitration by offering some predictability.  It is very important to note that this legislation does not mandate arbitration but, rather, provides a contemporary framework when and if arbitration is utilized. 

The MMA was adopted at a time when virtually all commerce was conducted through paper transactions.  The RUAA provides for the use of electronic records, contracts and signatures consistent with recent technological advancements in federal law (§1).  The MMA is also silent on how to initiate an arbitration.  The RUAA fills that gap by specifying notice requirements to adverse parties in arbitration.  This becomes especially effective in cases that are not instituted through ADR providers like JAMS and the American Arbitration Association.  The RUAA also recognizes that party autonomy may be trumped by the need to maintain some basic level of fairness.  Therefore, the RUAA provides for freedom of contract up to the point where varying arbitration terms may result in a violation of applicable law.  For example, parties may not waive at any time during the proceedings the right to compel or stay arbitration, the right to move to confirm or vacate an award and/or the immunity rights of arbitrators and sponsoring organizations (§4).  The RUAA makes it clear that the courts will determine whether or not an agreement to arbitrate exists but that the arbitrator will determine procedural issues of arbitrability such as timeliness and whether conditions precedent to filing have or have not been met. 

The MMA is silent and current case law confusing as to whether or not arbitrations involving the same transactions can be consolidated.  The U.S. Supreme Court has already clarified the issue of class action arbitrations.  The RUAA completes this clarification by providing a mechanism for consolidation if a party is not prejudiced by the outcome and the consolidation reduces the time and expense for the parties.  The Bill also precludes consolidation if the parties explicitly provide against it in their arbitration agreement (§10). 

The Michigan ADR Section Council specifically approved language on punitive damages to substitute for the initially drafted RUAA language.  The amended language was incorporated in Senate Bill 903.  This language provides that an arbitrator cannot award punitive damages or other exemplary relief unless the award is authorized by statute in a civil action involving the same claim, evidence produced at the hearing justifies such an award, the arbitrator specifies in the award the statutory and factual basis justifying the damages and states separately the amount of the punitive or exemplary relief that is being granted (§21).

The RUAA does not depart from the foundational provisions of the MMA or the Federal Arbitration Act.  Rather, it includes provisions that were previously addressed by arbitrators or courts on a case-by-case basis resulting in process inefficiencies, increased costs, and disparate results.  The RUAA is a quantitative improvement that will offer arbitration participants, enhanced predictability, lower the cost, shorten the length of proceedings, and, over time, increase the national uniformity of state arbitration legislation.

Many members of the ADR Section have worked to get this statute adopted.  In particular, Mary Bedkian, who started the process six or seven years ago authoring several "white papers" and who continues to work for passage of the RUAA's adoption today, as well as Bill Weber and Kathy Jacobs, who, along with me, testified in support of the adoption of Senate Bill 903.  Special thanks also goes to the ADR Section's lobbyist, Bill Kandler, and the ADR Section Council, who authorized and financed this effort.  On behalf of the ADR Section Council and PREMi, I request that you support the passage of the Revised Uniform Arbitration Act Senate Bill 903 and e-mail or write your State Representative or Bruce Timmons, the House Judiciary Committee legal counsel at [email protected], indicating your support and request a vote in favor of passage of this legislation.

 

 

Revised Uniform Arbitration Act

I just realized that I had a typo in the Senate Bill designation.. the correct one is Senate Bill 903. It appears that the House Judiciary Committee will be taking up the bill in early September. Please contact your State Representative and urge adoption.