I. General Introduction
A. Arbitration – three element definition
b. Determination with respect to a dispute by a third party
c.. Binding Resolution
1. Arbitration is alternative to courts and it is contractual.
2. Stems from an agreement that the parties will solve the dispute
outside the court system by voluntary means.
3. Insurance agreements are not arbitral in NE.
4. Advantage of arbitration is cost.
i. someone has to pay the arbitrator.
d. Whether there is an agreement comes from state law.
1. Which state law applies can be said in the agreement.
2. Federal law deals with the arbitability of the agreement.
3.. Can choose any state law that has a relationship to the deal that
you’re entering into.
e. Federal Arbitration Act – covers negotiated agreements and unilaterally
f. Definitions (no def in the Federal Arbitration act- only def. is in Black’s Law
Dictionary-there are two different definitions in the two most recent
dictionaries)-Cavia v. Katch (?)
i. something that is binding
ii.. an agreement with respect to a dispute that arises in the
g. Excerpts from American Institute of Architects- p.178
1. The architect can be an arbitrator.
2. The arbitrator doesn’t have to be a neutral third party- this is true
in any context.
3. The state law that applies is the law in which the project is located
h. Kelly v. Benchmark Homes –Stated that we have to arbitrate before we
litigate. This was a policy reason made by Congress.
i. Federal Arbitration Act –states that if the contract says you must arbitrate
first, they must adhere to that, but the parties are free to decide how they do that.
j. Arbitrators can’t compel a third-party to do anything
1. There is no discovery in Arbitration
2. Can’t compel testimony from a third-party
i. Advantages of Arbitration
a. Someone knows about what is going on
b. Litigation is extremely time consuming and usually
takes several years
c. Public aspect- there is a non-public aspect of arbitration
1. The arbitrator must abide by the agreement of
the parties- the arbitrator is the guest
3. Cite judicial economy and the inherit authority of the court to decide
whether to arbitrate or litigate. (it makes sense to arbitrate first and
II. Chapter 1-ACT
A. FEDERAL ARBITRATION ACT –Exists by legislation
a. Statutory System- rather than judicial system
i. Starting Point- Chapter 1 General Provisions
1. First – defines what can be arbitrated
a. §2 Contract-(a writing- the arbitration provision itself
must be in writing)
i. Standardized agreements- UCC
1. Binding only when adopted by a state
2. Based on negotiated agreements
2.. Two points at which the court has a major disagreement
a. Agreement that determines whether you are going
litigate or arbitrate
i. Motion practice- an application rather
than a petition
ii. Courts make the decision whether to litigate or
1. Only to the arbitration agreement, not to
the whole document
2. If it is clear that you should arbitrate
than an arbitration panel can make the
3. §16(B) of Federal Arbitration Act
4. UK §7 Vol. p.266
b. Whether to enforce the decision
i. Arbitration decision is worth nothing
unless the court confirms
1. Court can either confirm or vacate
a. If the court confirms then it is
i. it is then considered an
3. What disputes are subject to an arbitration agreement?
a. Kelley v. Benchmark homes- Express Warranty
b. Labor Contracts- only certain aspects are arbitral
c. Vol 1 p.12 –waives right to special damages
i. Sometimes statutes won’t let rights be waived
and therefore that part is severed.
d. Professor thinks that arbitration is a good system-
however the system has problems.
i. Can produce a result that is an aberration.
1. Usually the problem is the decision
2. There is no requirement of finding of
fact or conclusions of law. There is no
recording of the proceeding.
B. AMERICAN ARBITRATION ASSOCIATION –COMMERCIAL ARBITRATION RULES AND MEDIATION PROCEDURES
a. Administrative Rules
1. Difference between the way law is and the way it works.
2. Look at Case Law
i. Wilko 1953- Supreme Court said that arbitration is a
ii. Rodriguez 1989- overruled Wilko
iii. Alexander 1974- Labor case
iv. Scherk 1974- International Case- Supreme Court said
that procedures in regards to a Civil Rights case in an
individual claim is not right. Supreme Court decided to
v. Gilmore v. Interstate Employment
a. Footnote 3 p.236 –a worker may not waive a
right unless it is knowing and voluntary.
b. Determined the artribality of certain statutory
1. Involved a statute that involved certain
c. P. 234-235 black letter rule
d. It’s okay to substitute an arbitration process for a
1. there must be something specific of
3. There is no automatic requirement for a
3. AAA Rule 42 and NAA Rule 37 H entitled to a reasoned opinion
i. UK Rule 53=2
4. Award doesn’t have a lot judicial power until it becomes a
decree of the U.S. – (Lindland v. U.S p.531.)
i. Once you have a judicial decision then preclusion
applies (Lindland p. 533)
b. §10 Federal Arbitration Act
1. Within year
2. Bring it in a court that is specified in the contract
3. Enforceable in state courts
i. There is no U.S. Supreme court case under §10
ii. What about common law grounds.
a. Manifest disregard of the law- (common law grounds)
1. This equals thumbing your nose at the law
b. Easter Associated Coal p.162
1. Labor management case
iii. Third area- International Arbitration review p.260 Vol. 2 spells
out public policy
a. Should parties be able to contract fro an expanded
III. REVISED UNIFORM ARBITRATION ACT (RUAA)
A. PREFATORY NOTE
a. There are a number of principles that the Drafting Committee agreed upon at the
outset of its consideration of a revision to the UAA.
1. First, arbitration is a consensual process in which autonomy of the
parties who enter into arbitration agreements should be given primary
consideration, so long as their agreements conform to notions of
2. Second, the underlying reason many parties choose arbitration is the
relative speed, lower cost, and greater efficiency of the process. The law
should take these factors, where applicable, into account.
3. Finally, in most cases parties intend the decisions of arbitrators to be
final with minimal court involvement unless there is clear unfairness or a
denial of justice.
i. §14 insulate arbitrators from unwarranted litigation to insure
their independence by providing them with immunity.
ii. §12 requires arbitrators to make important disclosures to the
iii. §8 allows courts to grant provisional remedies in
In response, the NE Constitution was amended in 1996 to state
that the Legislature may provide for the enforcement of
mediation, binding arbitration agreements, and other forms of
dispute resolution. See Cornhusker Int’l Trucks
b. Cornhusker Int’l Trucks, Inc., v. Thomas Built Buses, Inc.
1. Bus manufacturer filed motion for order confirming arbitrator's award,
finding it had good cause to terminate its distributor sales agreement with
distributor, and distributor moved to vacate award. The District Court,
Lancaster County, Earl J. Witthoff, J., confirmed arbitrator's award, and
distributor appealed. The Supreme Court, Wright, J., held that: (1)
arbitration clause in agreement encompassed dispute over legality of
termination of agreement under state motor vehicle industry licensing
statutes; (2) plain language of agreement required arbitration of
unresolved dispute regarding termination of franchise; and (3) Federal
Arbitration Act (FAA) applied to agreement and preempted conflicting
state laws. Affirmed.
i. The FAA requires that any doubts regarding the scope of an
arbitration clause be resolved in favor of arbitration.
ii. Nebraska Uniform Arbitration Act- requires voluntary entry
into arbitration. Federal law doesn’t require this.
c. Neb. Const. Art. I §13 –Justice administered without delay; Legislature;
authorization to enforce mediation and arbitration.
1. “…except that the Legislature may provide for the enforcement of
mediation, biding arbitration agreements, and other forms of dispute
resolution which are entered into voluntarily and which are not revocable
other than upon such grounds as exist at law or in equity for the
revocation of any contract.”
d. Selected Portions of UK Arbitration Act 1996
IV. CHAPTER III PARAMETERS OF THE FEDERAL ARBITRATION ACT (FAA)
A. Federal Substantive Arbitration Law
a. Prima Paint Corporation v. Flood & Conklin MFG. CO. (1967) (gatekeeper)
1. This case presents the question whether the federal court or an arbitrator
is to resolve a claim of ‘fraud in the inducement,’ under a contract
governed by the U.S. Arbitration Act of 1925, where there is no evidence
that the contracting parties intended to withhold that issue from
i. This is a business to business transaction
ii. there is no difference between b2b and consumer
2. Issue: whether a claim of fraud in the inducement of the entire contract
is to be resolved by the federal court or whether the matter is to be
referred to the arbitrators. (should court compel arbitration and stay
i. Under §4 of the Act, with respect to a matter within the
jurisdiction of the federal courts save for the existence of an
arbitration clause the federal court is instructed to order
arbitration to proceed once it is satisfied that the making of the
agreement for arbitration or the failure to comply (with the
arbitration agreement) is not an issue.
ii. the statutory language does not permit the federal court to
consider claims of fraud in the inducement of the contract
iii. §3 FAA –the provision must be written someplace –Prima Paint
had such a written provision p. 31
iv. How did this get into federal court?
a. Diversity jurisdiction
b. Do you look to state (N.Y law) or do you look at other
c. choice of law issue –and preemption
d. If you don’t have a rule that is fed. law that wipes out
state law, then there is a mess…don’t know what law