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Sunday, December 15, 2013

Bankruptcy Law's Treatment of Creditors' Jury-Trial and Arbitration Rights

Bankruptcy Law's Treatment of Creditors' Jury-Trial and Arbitration Rights

This article starts with an apparent anomaly: Bankruptcy law treats the constitutional jury right with less deference than the, merely statutory, right to arbitrate.

This article explains that this apparent anomaly is actually the plausible result of a limitation within the Seventh Amendment jury right, its applicability only to claims at law but not claims in equity. The right to arbitrate is not similarly limited. So creditors seeking to arbitrate claims by and against debtors in bankruptcy are not defeated by longstanding holdings placing such claims on the equity side of the law/equity line. In contrast, creditors seeking jury trials of claims by and against debtors in bankruptcy are defeated by such holdings.

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