commercial arbitration: cases and problems

317 Pages·2015·1.28 MB·English

by  Drahozal, Christopher R.

COMMERCIAL ARBITRATION:
CASES AND PROBLEMS
LexisNexis Law School Publishing
Advisory Board

Paul Caron
Professor of Law
Pepperdine University School of Law

Bridgette Carr
Clinical Professor of Law
University of Michigan Law School

Steven I. Friedland
Professor of Law and Senior Scholar
Elon University School of Law

Carole Goldberg
Jonathan D. Varat Distinguished Professor of Law
UCLA School of Law

Oliver Goodenough
Professor of Law
Vermont Law School

John Sprankling
Distinguished Professor of Law
McGeorge School of Law
COMMERCIAL ARBITRATION:
CASES AND PROBLEMS

Third Edition

2015 Update
(July 1, 2015)

by

Christopher R. Drahozal
John M. Rounds Professor of Law
University of Kansas School of Law
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(pub. 3126)
TABLE OF CONTENTS
Page

Chapter 1 Introduction to Commercial Arbitration ................................................. 1

Chapter 2 Enforcing Domestic Agreements to Arbitrate ......................................... 9

Chapter 3 Federal Law Restrictions on the Enforceability of
Arbitration Agreements ......................................................................... 25

Chapter 4 The Federal Arbitration Act and State Law ......................................... 45

Chapter 5 Enforcing International Agreements to Arbitrate ................................ 49

Chapter 6 The Arbitration Proceeding ................................................................... 53

Chapter 7 Enforcing Arbitral Awards..................................................................... 83

Chapter 8 Drafting Arbitration Clauses ................................................................. 97

Documentary Supplement ........................................................................................... 99
New York Convention – New Ratifications .................................................... 99
Amendment to 48 C.F.R. § 222.7404(c) ......................................................... 100
S. 1133, Arbitration Fairness Act of 2015 ...................................................... 101
Fair Pay and Safe Workplaces Executive Order (July 31, 2014) .................. 106
Cal. Civ. Proc. Code § 1281.96 (effective Jan. 1, 2015) .................................. 108
Judicial Council of California, Amendments to the Standards for
Neutral Arbitrators in Contractual Arbitration (2014) ..................... 111
American Arbitration Association,
Commercial Arbitration Rules (2014) ................................................ 129
American Arbitration Association,
Consumer Arbitration Rules (2014) ................................................... 166
JAMS Employment Arbitration Rules and Procedures (2014) ..................... 194
UNCITRAL Rules on Transparency in Treaty-based
Investor-State Arbitration (2013) ........................................................ 216
American Arbitration Association/ICDR,
International Arbitration Rules (2014) .............................................. 224
LCIA Arbitration Rules (2014) ....................................................................... 253
International Bar Association, IBA Guidelines on Conflicts of Interest
in International Arbitration (2014) ..................................................... 290
International Bar Association, IBA Guidelines on Party Representation
in International Arbitration (2013) ..................................................... 310
American Arbitration Association, Drafting Dispute Resolution
Clauses—A Practical Guide (2013) ..................................................... 311
i
COMMERCIAL ARBITRATION ii
Chapter 1 Introduction to Commercial Arbitration

Add the following as new note 5 after the Tullock excerpt on page 8 and
renumber the existing notes accordingly:

5. In March 2015, the Consumer Financial Protection Bureau issued its Final
Report to Congress on the use of pre-dispute arbitration clauses in consumer
financial services contracts. See CFPB, Arbitration Study Report to Congress,
pursuant to Dodd–Frank Wall Street Reform and Consumer Protection Act
§ 1028(a) (Mar. 2015), http://files.consumerfinance.gov/f/201503_cfpb_arbitration-
study-report-to-congress-2015.pdf [hereinafter CFPB Final Report]. The study was
required by Section 1028(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, Pub. L. No. 111-203 (2010). Among the study’s many findings about
AAA arbitration proceedings were the following:

• “From 2010 through 2012, an average of 616 individual AAA cases were filed
per year for six product markets combined: credit card; checking
account/debit cards; payday loans; prepaid cards; private student loans; and
auto loans.”

• “Forty percent of the arbitration filings involved a dispute over the amount of
debt a consumer allegedly owed to a company, with no additional affirmative
claim by either party. In another 29% of the filings, consumers disputed
alleged debts, but also brought affirmative claims against companies.”

• “The average consumer affirmative claim amount in arbitration filings with
affirmative consumer claims was around $27,000. The median was around
$11,500. Across all six product markets, about 25 disputes a year involved
affirmative consumer claims of $1,000 or less.”

• “Almost all of the arbitration proceedings involved companies with repeat
experience in the forum. And when consumers had counsel, counsel was
generally a repeat player in arbitration.”
1
COMMERCIAL ARBITRATION 2

• “Of the 1,060 arbitration cases filed in 2010 and 2011, so far as we could
determine, arbitrators issued decisions in just under 33%. In approximately
25%, the record reflects that the parties reached a settlement. The remaining
cases ended in an unknown manner or were technically pending but dormant
as of early 2013.”

• “Of the 341 cases filed in 2010 and 2011 that were resolved by an arbitrator
and where we were able to ascertain the outcome, consumers obtained relief
regarding their affirmative claims in 32 disputes. Consumers obtained debt
forbearance in 46 cases (in five of which the consumers also obtained
affirmative relief). The total amount of affirmative relief awarded was
$172,433 and total debt forbearance was $189,107.”

• “Of the 244 cases in which companies made claims or counterclaims that
were resolved by arbitrators in a manner that we were able to determine,
companies obtained relief in 227 disputes. The total amount of such relief
was $2,806,662.”

CFPB Final Report, supra at 11-12.
3 INTRODUCTION TO COMMERCIAL ARBITRATION
Add the following to the end of note 1 after Smith v. AAA on page 18:

; Mave Enterprises, Inc. v. Travelers Indem. Co., 162 Cal. Rptr. 3d 671, 695 (Cal.
App. 2013) (“Nor does the confirmation of an arbitration award constitute state
action.”); Everett v. Paul Davis Restoration, Inc., 771 F.3d 380, 386 (7th Cir. 2014)
(“Ms. Everett also alleges that the arbitration agreement violated Ms. Everett's due
process rights. We find this argument wholly unavailing, as this argument fails at
the most basic level—none of the parties involved are state actors.”). Cf. Wellness
Int'l Network, Ltd. v. Sharif, 135 S.Ct. 1932, 1949 (2015) (Alito, J., concurring) (“No
one believes that an arbitrator exercises ‘[t]he judicial Power of the United States,’
Art. III, § 1, in an ordinary, run-of-the mill arbitration.”).
COMMERCIAL ARBITRATION 4

Add the following to the end of note 1 after AMF Brunswick on page 22:

See Druco Restaurants, Inc. v. Steak n Shake Enterprises, Inc., 2013 U.S. Dist.
LEXIS 156942, at 17 (S.D. Ind. Oct. 9, 2013) (citing “split amongst the Circuit
Courts of Appeals as to whether or not non-binding arbitration is subject to the
FAA”), aff’d on other grounds, 765 F.3d 776 (7th Cir. 2014).