Arbitration
Prof. John Barkai
William S. Richardson School of Law
University of Hawaii
Arbitration is a creature of contract
CHINESE ARBITRATION
The great Chinese Emperor Kang-hsi (during the Manchu Dynasty) issued the
following decree, in response to complaints about his courts:
"The Emperor, considering the immense population of the empire, the great
division of territorial property and the notoriously litigious character of the
Chinese, is of the opinion that lawsuits would tend to increase to a frightful
extent if people were not afraid of the tribunals and if they felt confident of
always finding in them ready and perfect justice. I desire, therefore, that those
who have recourse to the courts should be treated without any pity and in such
a manner that they shall be disgusted with the law and tremble to appear
before a magistrate. In this manner ... the good citizens who may have
difficulties among themselves will settle them like brothers by referring them to
the arbitration of some old man."
- National Geographic Magazine, June 1927
Arbitration Clause
from
George Washington's Will
"... that all disputes (if unhappily any should arise) shall be
decided by three impartial and intelligent men, known for
their probity and good understanding; - two to be chosen by
the disputants - each having the choice of one - and the
third by these two - which three men then chosen, shall
unfettered by law, or legal constructions, declare their sense
of the testator's intention; and such decision is, to all intents
and purposes, to be as binding on the parties as if it had
been given in the Supreme Court of the United States."
VERY SIMPLE
ARBITRATION CLAUSE
All disputes arising out
of this contract shall be
submitted to arbitration.
ADVANTAGES
• final and binding
• less formal than litigation
• less expensive than litigation
• faster than litigation
• hearing are private
• awards are confidential
• remedies are fixed by law
• parties select the neutral arbitrator
DISADVANTAGES
• final and binding
• less formal than litigation
• very limited appeal rights
• one party wins; one party loses
• unlikely to reach creative solutions
"Snow White and the Wicked Queen submit
the fairness question to binding arbitration."
Forms of Arbitration
Domestic & International
1. Traditional (binding) arbitration
2. "New" (usually non-binding) arbitration
3. Mandatory (consumer & employment contracts) arbitration
4. Arbitration Statutes
FAA 1925 (Federal Arbitration Act)
UAA 1955 (Uniform Arbitration Act)
RUAA 2000 (Revised UAA)
HRS 658A (Hawaii)
5. International
New York Convention provides for enforcement of "foreign
arbitration awards"
Traditional
Binding
Arbitration
IFG Network Securities, Inc.
Agreement to Arbitrate Controversies
... Any judicial proceedings relating to the arbitration
or to this Agreement shall be conducted in a state or
federal court in Fulton Country, Georgia, and I agree
(a) to submit to the jurisdiction of any such court, (b)
that any such court constitutes a convenient forum,
and (c) that process may be served by certified mail
, return receipt requested at my last address known
to IFGNS.
New Variations
of Arbitration
• Non-binding arbitration (CAAP)
• Baseball arbitration
• Night baseball
Mandatory Arbitration
(Consumer & Employment contracts)
Credit cards
Stock Purchases
“Lemon Law” – new cars
Internet Computer Purchases
Hooters & Circuit City employment cases
Sears Credit Card Agreement
How Arbitration Works
… choose … American Arbitration Association or JAMS. Any arbitration hearing
that you attend will be held at a place chosen by the arbitration firm in the same
city as the U.S. District Court closest to your then current billing address or some
other place which you and we agree in writing.
A single, neutral arbitrator will resolve Claims. The arbitrator will be either a lawyer
with at least 10 years of experience or a retired or former judge, selected in
accordance with the rules of the arbitration firm…The arbitrator will make any
award in writing and, if requested by you or us, will provide a brief statement of the
reasons for the award.
When is an arbitration award final? The arbitrator's award is final and binding on
the parties unless a party appeals it in writing to the arbitration firm within fifteen
days of notice of the award. The appeal must request a new arbitration before a
panel of three neutral arbitrators designated by the same arbitration firm. The
panel will consider all factual and legal issues anew, follow the same rules that
apply to a proceeding using a single arbitrator, and make decisions based on the
vote of the majority. Costs will be allocated in the same way they are allocated for
arbitration before a single arbitrator. An award by a panel is final and binding on
the parties after fifteen days has passed. A final and binding award is subject to
judicial review and enforcement as provided by the FAA or other applicable law.
Arbitration Statutes
FAA 1925 (Federal Arbitration Act)
UAA 1955 (Uniform Arbitration Act)
RUAA 2000 (Revised UAA)
HRS 658A (Hawaii) (RUAA)
- allows full discovery
HRS 658A.
UNIFORM ARBITRATION ACT
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658A- 1 Definitions.
658A- 2 Notice.
658A- 3 When chapter applies.
658A- 4 Effect of agreement to arbitrate; nonwaivable provisions.
658A- 5 Application for judicial relief.
658A- 6 Validity of agreement to arbitrate.
658A- 7 Motion to compel or stay arbitration.
658A- 8 Provisional remedies.
658A- 9 Initiation of arbitration.
658A-10 Consolidation of separate arbitration proceedings.
658A-11 Appointment of arbitrator; service as a neutral arbitrator.
658A-12 Disclosure by arbitrator.
658A-13 Action by majority.
658A-14 Immunity of arbitrator; competency to testify; attorney's fees and costs.
658A-15 Arbitration process.
658A-16 Representation by lawyer.
658A-17 Witnesses; subpoenas; depositions; discovery.
658A-18 Judicial enforcement of pre-award ruling by arbitrator.
658A-19 Award.
658A-20 Change of award by arbitrator.
658A-21 Remedies; fees and expenses of arbitration proceeding.
658A-22 Confirmation of award.
658A-23 Vacating award.
658A-24 Modification or correction of award.
658A-25 Judgment on award; attorney's fees and litigation expenses.
658A-26 Jurisdiction.
658A-27 Venue.
658A-28 Appeals.
658A-29 Relationship to Electronic Signatures in Global and National Commerce Act.
RUAA in Hawaii
§ 658A-17 Witnesses; subpoenas; depositions; discovery.
(a) An arbitrator may issue a subpoena for the attendance of a witness and for
the production of records and other evidence at any hearing and may
administer oaths. …
(b) … an arbitrator may permit a deposition of any witness to be taken for use
as evidence at the hearing, including a witness who cannot be subpoenaed for
or is unable to attend a hearing. …
(c) An arbitrator may permit such discovery as the arbitrator decides is
appropriate in the circumstances…
(d) If an arbitrator permits discovery under subsection (c), the arbitrator may
order a party to the arbitration proceeding to comply with the arbitrator's
discovery-related orders, issue subpoenas for the attendance of a witness and
for the production of records and other evidence at a discovery proceeding, and
take action against a noncomplying party to the extent a court could if the
controversy were the subject of a civil action in this State.
(e) An arbitrator may issue a protective order to prevent the disclosure of
privileged information, confidential information, trade secrets, and other
information protected from disclosure to the extent a court could if the
controversy were the subject of a civil action in this State
RUAA - WAIVABLE PROVISIONS
The RUAA provides that, under certain conditions, parties
can agree to waive or vary from most of its procedural
mechanisms (i.e., notice, discovery, the hearing process,
motions) and even such matters as remedies, fees, and
venue. What can not be waived or varied from under
any circumstances are the sections dealing with: the
statute’s general application; when and how motions to
compel arbitration can and may be brought; the
arbitrator’s immunity; post-award confirmation, vacatur,
modification, and judgment; and the use of electronic
signatures
See Chart in THE NEW WORLD OF ARBITRATION: AN OVERVIEW OF THE REVISED UNIFORM ARBITRATION ACT
6-NOV Haw. B.J. 6 (2002), Keith Hunter , Susan Ichinose, James Paul, Andrew Winer
International Commercial
Arbitration
United Nations Convention on the
Recognition and Enforcement of
Foreign Arbitral Awards
The New York Convention
145 Signatories
as of March 2011
2 IMPORTANT CONCEPTS FOR
INTERNATIONAL ARBITRATION
Sovereignty
- supreme power
- freedom from external control
Jurisdiction
- the power, right, or authority to interpret and apply the law.
- the authority of a sovereign power to govern or legislate.
http://www.legacarta.net/maps/start.php?sid=8c0d994ea1687a3b4e69c7785c6d2c46
As of 2009