Matters Column

Revised Uniform Arbitration Act will take effect in July

March 22, 2013
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Michigan's "bare bones" arbitration laws have been given more definition by legislation passed during the recent lame duck legislative session.

The new statute, known as the Revised Uniform Arbitration Act and effective July 1 of this year, deals with virtually the full spectrum of issues in private arbitration, including agreements to arbitrate, the procedure for invoking and enforcing arbitration obligations, and the arbitrator's selection, ethical obligations and authority.

The statute also addresses the process by which an arbitration award may be confirmed, vacated, modified, or corrected. Also included are requirements affecting appeals from court orders compelling or denying arbitration and orders confirming, vacating, modifying or correcting arbitration awards.

Many of the new provisions may seem entirely predictable, but several are worthy of special mention.

New definitions and the scope of arbitration

Initially, the definitional section of the Act indicates that an "arbitration organization" is virtually any neutral entity that initiates, sponsors or administers arbitrations or is involved with arbitrator selection.

The statute also defines a "record" as a prerequisite to the finding of an agreement to arbitrate, and includes both written and electronic records.

Parties to arbitration can waive or vary the applicable law, but there is a long list of statutory requirements that may not be waived.

The only issues to be decided by a court in an action to compel arbitration are whether a valid agreement to arbitrate exists between the parties and whether a particular controversy is subject to that agreement. All other issues are to be decided by the arbitrator including, most notably, alleged timeliness and other procedural irregularities.

Provisional remedies and multiple claims

The statute lists provisional remedies pending arbitration — such as maintenance of the status quo — by indicating that such remedies may land in the province of the courts before an arbitrator has been selected, but are in the province of the arbitrator once an arbitrator is selected except in cases where the matter is urgent and where the arbitrator is unable to timely or effectively act.

There is also specific guidance in the statute addressing the issue of when multiple claims between the parties may properly be consolidated.

Arbitrator immunity and representation by counsel

Under the Act, arbitrators are granted the same essential immunity from civil liability enjoyed by Michigan judges.  This makes arbitrators generally immune to forced testimony, whether by subpoena or otherwise.

The grounds upon which an arbitrator may award punitive damages and reasonable attorney fees to a party are also defined in the Act.

Also addressed in the statute are a party's right to be represented by counsel and time limits for certain commonly occurring arbitration activities. Finally, the statute addresses both the subpoena process for securing non-party witnesses and the discovery process to be followed during arbitration.

Reacting to the changed law

The new law should not only provide meaningful guidance for those affected or potentially affected by the arbitration process, it should also simplify and decrease litigation over enforcement of arbitration agreements and the enforceability of arbitration awards once a proceeding has been held and a decision or award has been rendered.

For those business entities that have arbitration requirements in their employee handbooks or company documents, it may make sense to conduct a brief legal review to assess the impact that the new law may have on such provisions.

A meaningful review process will also focus on whether changes to arbitration language are warranted, given the change in the law.

Richard Hooker is a partner in the Labor Group in the law firm of Varnum LLP.

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