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Commercial Arbitration
St. Johns University School of Law
Weiskopf, Nicholas R.

 
 
Commercial Arbitration
Fall 2010
Professor Weiskopf
 
 
                            I.   History
 
a)    Merchants, ethnic and religious used it
b)    Courts Hostile at first to arbitration and wanted to preserve jurisdictions
c)    Arb clauses were revocable until the 1920’s
 
                              II.      Statutory Framework
a)    NY- First arb statute in 1920
b)    Fed Statute 1925
 
                               III.        Elements that were through to make Arb MORE Flexible
 
   a) Less than full scale of judicial review
   b) Alright to insist on exchange of material and certain pieces of information
   c) Rules on evidence don’t apply and the Arb may take tesitory by affidavit where it is fair and they can give it the weight they wish
    d) Reward is not detailed or reasoned. This makes it hard for judicial review and limits review
   e) Limited Time Scale
 
                                    IV.      General Arb Statutes Provide For:
     a) Judicial enforcement of agreement to arbitrate
     b) Pre-dispute agreement to arbitrate is like an K
     c) Express authorization from courts to stay litigation pending arb hearing.
     d) Arbitral awards to be judicially enforceable and subject to full faith and credit clause. That makes them difficult to overturn.
     e) Allow prevailing party to take an award in its favor and get it entered as court judgment that will have the same force and effect as a judgment          procured by a judicial trial.
 
                                       V.        Enforcement of Arbitration Agreement
 
a)    9.u.s.c 2- Arb agreement are enforceable UNLESS
–          grounds exist at law or in equity for revocation of any K.
–          Arb clause puts arb in same area as any K
 
                                      VI.        Arbitration and Substantive Rights
 
a)    Cardzo- Compelling arbitration does not deprive parties of substantive rights it just provides procedural changes.
b)    The loss of a jury trial does not compel stay of arbitration, parties may even waive that in court proceedings
 
 
                                             VII.        Arbitral Discretion
 
a)    Arb’s find “just solutions”
b)    Predictability is not an objective of arbitration
c)    Arb’s have board power to fashion equitable remedies.
 
                                           VIII.        Arbitrable Neutrality
 
a)    ADR Can contitute Arbitration Where:
(1) Third-party decision maker
(2) Final & Binding Decision
(3) Mechanism assure a minimum level of impartiality with respect to rendering of the decision
 
b)    Neutrality
-As long as there is full disclosure, we assure that the neutral arb is not pre-disposed.
 
c)    Key Pre-requisites to bona fide arb panel
(1) Neutral decision maker
(2) Opportune to put in case
 
d)    Tripartite Proceeding
-This allows each party to designate one arbitrator and have a third arbitrator serve as neutral. Generally, the arbitrators that the parties selected designate the third. The neutral arb will case the deciding vote.
 
e)    Designated Arb- Fair/Unbiased
(1) Can be former CEO, member of the board, and a paid consultant of one of the parties
(2) Still can’t be biased or
(3) An actual party to the arbitration
(4) can be someone that has had commercial dealings with that party
(5) MUST  disclose all pre-dispositions
-Failure to do so may upset award
-If disclosure gives a party a worry they can ask for relief, but there is a presumption of neutrality.
 
 
 
 
 
 
                                              IX.        STATUTORY CLAIMS
a)    History
(1) First- not allowed
(2) Wilko- Security act required exercise of judicial discretion and one cannot w

commerce.
c)    If the Claim DOES NOT involve IC > state law (or agreements choice of law applies)
d)    If the FAA applies and state law conflicts > state courts must follow FAA provisions and its CL
e)    If FAA applies and state law is no confliction and is not hostile to arbitration > state court (or fed in diversity) will apply state law.
   -Ex: FAA silent on SOL
 
f)     If FAA is silent but state law IS hostile to arbitration > state courts (or fed court in diversity) will disregard the state law
-Ex: NYCPLR states that all arb agreements must be in CAPS > St court will have to disregard this law if FAA applies.
-State PP doesn’t matter
 
g)    Volt- If case is brought in state court and the Arb clause explicitly opts for that states law of arb. The state law comes in unless that state law provision is manifestly hostile to FAA or to arbitration in general.
 
b) Arbitration Claims in Federal Court
1.    “Affecting/involving Commerce”
–          Fed Broaden IC- Kitchen SINK=Everything
–          Entities having offices in different places
–          K evidencing a transaction involving commerce irrespective of what parties contemplated
–          Intrastate dispute involving an area traditionally supervision would implicate IC
–          Lending $- affected IC b/c affected the brorrower’s business which was out of state
–          9 U.S.C. Commerce does not cover employment of seamen, railroad employees or any other class of workers engaged in IC. They have their own arb agreements