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Thursday, July 31, 2014

President Obama's Executive Order Against Employment Arbitration

President Obama today signed a new Fair Pay and Safe Workplaces Executive Order refusing to grant government contracts of over a million dollars to employers who contractually require their employees arbitrate certain disputes.  UNLV Law Professor Jean Sternlight's commentary says "This new order mirrors protections Congress already provided to employees of Defense Department contractors in 2011."

Friday, July 25, 2014

Arbitration Award Based on Issue Preclusion (Collateral Estoppel) Enforced

A recent second circuit case confirmed an arbitrator's power to rule against a claim on the ground that of issue preclusion (collateral estoppel).  Specifically, the arbitrator found an Administrative Law Judge had already resolved the relevant issue against the claimant.  The case, American Postal Workers Union, AFL-CIO v. U.S. Postal Service, __F.3d__, 2014 WL 2535249 (2d Cir. June 6, 2014), is discussed here by Liz Kramer.

Tuesday, July 22, 2014

Settlement of Cases in Arbitration

Commercial Arbitration and Settlement: Empirical Insights into the Roles Arbitrators Play
by Thomas Stipanowich and Zachary P Ulrich, both of Pepperdine University School of Law

A wide-ranging new Straus Institute for Dispute Resolution Survey of experienced arbitrators, conducted with the cooperation of the College of Commercial Arbitrators, reflects the growing professionalization of commercial arbitration, increasing competition for cases, and many other trends in arbitration practice. It also shows that a grower percentage of arbitrated cases are being settled prior to award or to the start of hearings, and offers a strong rationale for greater emphasis on the role of arbitrators in setting the stage for or facilitating settlement. Early settlement of a dispute can be a uniquely effective way of minimizing cost and cycle time in dispute resolution, but the role of has not been given significant attention. Survey data indicate that the incidence of settlement varies widely among arbitrators, and suggest that some experienced arbitrators do not perceive their arbitral role as extending to the promotion of settlement. On the other hand, many experienced arbitrators are conducting themselves as proactive managers of the case before them, and many perceive a connection between their activities and settlement. One of the most effective means by which arbitrators “set the stage” for settlement is by ruling on dispositive motions. Other arbitrators have taken more direct action in facilitating settlement, sometimes by serving as both a mediator and an arbitrator with respect to a dispute. This article considers the function of settlement in the quest for economy and efficiency in dispute resolution and various approaches aimed directly at promotion of settlement, such as stepped dispute resolution, creative variants, and “med-arb.” It examines ways in which techniques featured in recent initiatives promoting more cost-effective and expeditious arbitration may also lay the groundwork for settlement; in addition, it explores the more contentious proposals put forward by the CEDR Commission on Settlement in International Arbitration. The article summarizes new Survey results showing a recent increase in the incidence of pre-hearing and pre-award settlement in arbitration, as well as Survey responses reflecting experienced arbitrators’ differing perspectives toward their role respecting informal settlement. Among other things, it focuses on the activities some arbitrators regard as setting the stage for settlement, particularly their handling of dispositive motions in arbitration; it also briefly considers the more controversial approach involving a single individual serving the dual roles of mediator and arbitrator. It concludes with straightforward proposals to stimulate appropriate involvement by arbitrators as well as attorneys and other “stakeholders” in setting the stage for settlement.

Saturday, July 19, 2014

The Arbitration Clause as Super Contract

by Drexel Law's Richard Frankel.  The abstract says in part:

judicial reliance on the federal policy favoring arbitration unfairly deprives litigants of access to the courts by pushing cases into arbitration that do not belong there. By creating special rules that favor arbitration and that deviate from state contract law, courts are enforcing arbitration agreements in situations where they would not enforce other agreements. This article questions the basis for the federal policy favoring arbitration and identifies several areas in which courts are relying on it to over-enforce arbitration clauses. Because the original purpose of the Federal Arbitration Act was to make arbitration clauses just like other contracts, this article proposes that courts should not rely on a poorly-conceived federal policy favoring arbitration, but instead should apply general contract principles to arbitration clauses. Doing so best ensures that litigants are not unfairly forced into arbitration in situations where they never agreed to it.

Separately, Frankel testified before the Consumer Financial Protection Bureau:

“A lot of corporate wrongdoing involves cheating consumers out of small amounts of money, but doing that across thousands or millions of people, so that the company makes huge amounts of money,” Frankel said. “What it does is ensure that instead of arbitration being an alternate form of dispute resolution, it guarantees that consumers have no forum at all.”

International Investment Arbitration

Challenging arbitrators under ICSID and UNCITRAL rules.  Challenges of International Investment Arbitrators: How Does It Work and Does It Work? by Chiara Giorgetti of the Richmond University School of Law. The Abstract:      

In this article, I examine and assess how challenges are decided in international investment arbitration, and suggest ways to improve challenge proceedings. The analysis focuses only on the rules of the Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID Rules) and the 1976 and 2010 UNCITRAL Arbitration Rules ("UNCITRAL . Rules (1976)" and "UNCITRAL Rules (2010)") because the great majority of international investment proceedings occur under either of those rules. In the first part, I describe the qualities required for an arbitrator's appointment under ICSID and UNCITRAL Rules. I then assess.and compare the standards for challenges under those rules, first procedurally, and then substantially. In the conclusion, I suggest that the ICSID challenges procedures should be amended to be more in line with the UNCITRAL Rules. Specifically, I argue that a neutral and independent body should decide arbitrator challenges in ICSID proceedings. I also argue that the standard applied in challenges to arbitrators in ICSID proceedings is too onerous, and should be interpreted taking into consideration the International Bar Association Guidelines for Conflict of Interest in International Arbitration (IBA Guidelines).

Saturday, July 12, 2014

Nursing Home Arbitration Enforced

The South Carolina Supreme Court recently enforced a nursing home's arbitration agreement, in
Dean v. Heritage Healthcare of Ridgeway, LLC, __S.E.2d__, 2014 WL 2771300 (S.C. June 18, 2014).

As Liz Kramer explains:

the agreement said that “any arbitration proceeding that takes place under this [] Agreement shall follow the rules of the [AAA]“.  However, the AAA stopped accepting personal injury disputes based on pre-injury arbitration agreements in 2003.  The nursing home moved to compel arbitration and the trial court denied the motion.  It found that the language about the AAA rules meant that the dispute should be heard by the AAA and since the AAA was not available, the arbitration agreement was invalid.  The Supreme Court of South Carolina reversed.  But before the supremes could get to the merits, they had to overrule their own 1993 decision, which held that nursing home contracts did not involve interstate commerce.  After reviewing the intervening cases from SCOTUS, the court found the nursing home agreement does involve interstate commerce and is governed by the FAA.  On the merits, the court found that the availability of the AAA to administer the arbitration was not a material term and instead the parties’ agreement simply calls for the arbitration to be governed by the AAA rules, regardless of what entity administers the proceeding.

Thursday, July 3, 2014

Criticism of SCOTUS Arbitration Cases: Concepcion and Amex

U.S. Supreme Court rulings AT&T Mobility v. Concepcion and American Express v. Italian Colors criticized by Lina Khan who writes that these "decisions culminate a thirty-year trend during which the judiciary, including initially some prominent liberal jurists, has moved to eliminate courts as a means for ordinary Americans to uphold their rights against companies. The result is a world where corporations can evade accountability and effectively skirt swaths of law, pushing their growing power over their consumers and employees past a tipping point."