Federal public policy favors arbitration and the broad interpretation and enforcement of arbitration agreements. So how can an arbitration agreement be held by a court to be void as against public policy? One answer from a state court (in circumstances where the Federal Arbitration Act did not apply) is that toying with a statutory arbitration scheme could do the trick.
You presented your case, and the arbitration tribunal came back with a reasoned decision and an award in your favor. You even had the award confirmed here in the United States. You want to enforce it. But you find that the award-debtor’s assets are all held in or have been moved to a country that is not a party to the New York Convention. Now what?
Under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., if a District Court compels arbitration of all of the claims that are before it, and thereupon dismisses the suit, its order compelling arbitration is final and appealable; but if the District Court stays the suit, its order compelling arbitration is “non-final” and not immediately appealable. So what’s a right and proper court to do? The Federal Courts of Appeal are divided on the question of whether the FAA requires a stay or dismissal of judicial proceedings after a District Court sends all of the claims in suit before it to arbitration. Currently, some parts of the U.S. are in effect more “arbitration friendly” in this regard than others.
(Note that we are not considering here the case of an “independent” motion to compel or to stay arbitration. In that case, a petition under FAA § 4 commences a special proceeding, and no ordinary claim in suit is before the court.)
UPDATE: On February 8, 2017, the Supreme Court announced that it would delay until its October 2017 term oral arguments in the consolidated cases concerning the enforceability of class arbitration waivers in employment agreements. (This updates our Blogpost dated Jan. 31, 2017.)
Many anticipate that Judge Gorsuch will have been confirmed by the Senate by then, which likely explains the Supreme Court’s decision to delay oral argument. Because the Court granted certiorari based upon a Circuit split, it presumably hopes to avoid a possible 4-4 vote by the current Justices, which would permit the various Circuit Court rulings to stand, leaving the matter unresolved nationally.
While we expect that Justice Gorsuch, a reputed strict constructionist, will in effect be a pro arbitration judge, his questions during oral argument will offer a glimpse of how he might decide the particular issues presented here concerning employment class arbitration.
The Supreme Court is currently set to answer the question of whether employees must be permitted, if they choose, to pursue relief collectively in an arbitration proceeding. Is that “concerted activity” that is protected by the National Labor Relations Act, and does that statutory provision supervene the provisions of the Federal Arbitration Act and the right to contract freely? And specifically, is a waiver of class actions in an arbitration clause in an employment agreement enforceable?
Published in Law 360 (Jan. 23, 2017)
A Federal court in New York recently opened the door there for U.S.-style discovery of evidence in aid of foreign or international commercial arbitrations, in accordance with a unique American statute – 28 United States Code (“U.S.C.”) § 1782.
Is an arbitration clause mandatory or permissive when it provides that either party to the contract may elect to submit a dispute to binding arbitration? What if the contract also provides that the right to arbitrate is not exclusive of any other rights that a party has to pursue legal action in an appropriate forum? Such an arbitration clause certainly sounds permissive. But courts have invested a lot of ink addressing the question, and (spoiler alert!) they have more or less consistently come to the conclusion that such a clause makes arbitration mandatory if any party chooses it.
At its core, a mandatory arbitration clause makes arbitration the exclusive dispute resolution method available to either party by contract, while a permissive clause requires arbitration only if a party elects it and no other party objects to it. This leads many litigants and their attorneys to assume that the use of the word “may” and/or a non-exclusivity statement in an arbitration clause makes it permissive, not mandatory.
Published in Corporate Counsel (Dec. 21, 2016)
Relevant codified procedural rules with respect to the use of experts in international arbitration are scarce, and the parties and the arbitrators therefore get to create the pertinent rules of the road in each individual proceeding. In “The Use of Experts in International Arbitration: The Rules of the Road”, we provide tips with regard to doing just that. Read the full article here.
In an effort to streamline arbitration proceedings where possible, the International Court of Arbitration of the International Chamber of Commerce (“ICC”) announced on November 4, 2016 that it would issue new Expedited Procedure Rules, effective March 1, 2017, which will comprise the new Appendix VI of its Rules of Arbitration (“ICC Arb. R.”). The ICC also announced that it will amend ICC Arb. R. Article 30, which is its current rule governing expedited procedures, as well as Appendix III, which contains the schedules of administrative expenses and arbitrator fees.
When effective, the new Expedited Procedure Rules (“EPRs”) will apply automatically if the amount in dispute does not exceed US$2,000,000 (App. VI, Art. 1(2)), although the ICC Court of Arbitration will have discretion, after consultation with the arbitral tribunal and the parties, to decide that the rules ought not apply to a particular case (id., Art. 1(4); and ICC Arb. R. 30(3)(c)). The EPRs also will not apply if the parties’ arbitration agreement came into effect before March 1, 2017, or if the parties expressly agreed to opt out of the Expedited Procedure Rules. (ICC Arb. R. Art. 30.)
Published in Law 360 (Dec. 12, 2016)
In this article – “Drafting Sensible and Effective Multi-Step ADR Provisions” – we provide practical advice regarding factors to be accommodated in fashioning multi-step ADR provisions that are (1) useful and (2) likely to be enforced by the courts. Read the full article here.