ArbitrationArbitrationProf. John BarkaiProf. John Barkai

William S. Richardson School of LawWilliam S. Richardson School of LawUniversity of HawaiiUniversity of Hawaii

Arbitration is a creature of Arbitration is a creature of contractcontract

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.

ADVANTAGESADVANTAGES

•final and bindingfinal and binding• less formal than litigationless formal than litigation• less expensive than litigationless expensive than litigation•faster than litigationfaster than litigation•hearing are private hearing are private •awards are confidentialawards are confidential•remedies are fixed by lawremedies are fixed by law•parties select the neutral parties select the neutral

arbitratorarbitrator

DISADVANTAGESDISADVANTAGES

•final and bindingfinal and binding

• less formal than litigationless formal than litigation

•very limited appeal rightsvery limited appeal rights

•one party wins; one party losesone party wins; one party loses•unlikely to reach creative unlikely to reach creative

solutionssolutions

"Snow White and the Wicked Queen submit the fairness question to binding arbitration."

Forms of ArbitrationDomestic & International

1. Traditional (binding) arbitration

2. "New" (usually non-binding) arbitration

3. Mandatory (consumer & employment contracts) arbitration

4. Arbitration StatutesFAA 1925 (Federal Arbitration Act)UAA 1955 (Uniform Arbitration Act)RUAA 2000 (Revised UAA)HRS 658A (Hawaii)

5. InternationalNew 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 VariationsNew Variationsof Arbitrationof Arbitration

•Non-binding arbitration Non-binding arbitration (CAAP)(CAAP)

•Baseball arbitrationBaseball arbitration

•Night baseballNight baseball

Mandatory Arbitration

(Consumer & Employment contracts)

Credit cardsStock Purchases

“Lemon Law” – new carsInternet Computer Purchases

Hooters & Circuit City employment cases

Sears Credit Card AgreementHow 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. HRS 658A. UNIFORM ARBITRATION ACT UNIFORM ARBITRATION ACT

• 658A- 1658A- 1 Definitions.Definitions. • 658A- 2658A- 2 Notice. Notice. • 658A- 3658A- 3 When chapter applies. When chapter applies. • 658A- 4658A- 4 Effect of agreement to arbitrate; nonwaivable provisions. Effect of agreement to arbitrate; nonwaivable provisions. • 658A- 5658A- 5 Application for judicial relief. Application for judicial relief. • 658A- 6658A- 6 Validity of agreement to arbitrate.Validity of agreement to arbitrate.• 658A- 7658A- 7 Motion to compel or stay arbitration.Motion to compel or stay arbitration.• 658A- 8658A- 8 Provisional remedies.Provisional remedies.• 658A- 9658A- 9 Initiation of arbitration.Initiation of arbitration.• 658A-10658A-10 Consolidation of separate arbitration proceedings.Consolidation of separate arbitration proceedings.• 658A-11658A-11 Appointment of arbitrator; service as a neutralAppointment of arbitrator; service as a neutral arbitrator. arbitrator. • 658A-12658A-12 Disclosure by arbitrator.Disclosure by arbitrator.• 658A-13658A-13 Action by majority.Action by majority.• 658A-14658A-14 Immunity of arbitrator; competency to testify; attorney's fees and costs.Immunity of arbitrator; competency to testify; attorney's fees and costs.• 658A-15658A-15 Arbitration process.Arbitration process.• 658A-16658A-16 Representation by lawyer.Representation by lawyer.• 658A-17658A-17 Witnesses; subpoenas; depositions; discovery.Witnesses; subpoenas; depositions; discovery.• 658A-18658A-18 Judicial enforcement of pre-award ruling by arbitrator. Judicial enforcement of pre-award ruling by arbitrator. • 658A-19658A-19 Award.Award.• 658A-20658A-20 Change of award by arbitrator.Change of award by arbitrator.• 658A-21658A-21 Remedies; fees and expenses of arbitration proceeding. Remedies; fees and expenses of arbitration proceeding. • 658A-22658A-22 Confirmation of award.Confirmation of award.• 658A-23658A-23 Vacating award.Vacating award.• 658A-24658A-24 Modification or correction of award.Modification or correction of award.• 658A-25658A-25 Judgment on award; attorney's fees and litigationJudgment on award; attorney's fees and litigation expenses. expenses. • 658A-26658A-26 Jurisdiction.Jurisdiction.• 658A-27658A-27 Venue.Venue.• 658A-28658A-28 Appeals.Appeals.• 658A-29658A-29 Relationship to Electronic Signatures in Global andRelationship to Electronic Signatures in Global and National Commerce Act.National Commerce Act.

§ 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 in Hawaii

RUAA - WAIVABLE PROVISIONSRUAA - WAIVABLE PROVISIONS

The RUAA provides that, under certain conditions, The RUAA provides that, under certain conditions, parties can agree to waive or vary from most of parties can agree to waive or vary from most of its procedural mechanisms (its procedural mechanisms (i.e.i.e., notice, discovery, , notice, discovery, the hearing process, motions) and even such the hearing process, motions) and even such matters as remedies, fees, and venue. What can matters as remedies, fees, and venue. What can not be waived or varied from under any not be waived or varied from under any circumstances are the sections dealing with: the circumstances are the sections dealing with: the statute’s general application; when and how statute’s general application; when and how motions to compel arbitration can and may be motions to compel arbitration can and may be brought; the arbitrator’s immunity; post-award brought; the arbitrator’s immunity; post-award confirmation, vacatur, modification, and confirmation, vacatur, modification, and judgment; and the use of electronic signatures judgment; and the use of electronic signatures

See Chart in THE NEW WORLD OF ARBITRATION: AN OVERVIEW OF THE REVISED UNIFORM ARBITRATION ACT6-NOV Haw. B.J. 6 (2002), Keith Hunter , Susan Ichinose, James Paul, Andrew Winer

International Commercial International Commercial ArbitrationArbitration

United Nations Convention on United Nations Convention on thethe

Recognition and Enforcement of Recognition and Enforcement of Foreign Arbitral AwardsForeign Arbitral Awards

The New York ConventionThe New York Convention

145 Signatories145 Signatories as of March 2011 as of March 2011

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.

2 IMPORTANT CONCEPTS FOR INTERNATIONAL ARBITRATION

http://www.legacarta.net/maps/start.php?sid=8c0d994ea1687a3b4e69c7785c6d2c46

As of 2009