Consolidation, Joinder and Class Actions: What Arbitrators and Courts May and May Not Do - Dispute Resolution Journal - Vol. 57, No. 4

Author(s):

Richard Jeydel

Page Count:

7 pages

Published:

October, 2002

Jurisdictions:

United States

Practice Areas:

Powers of Arbitrators,

Jurisdiction and Powers of the Courts in Matters of Arbitration Generally,

Class Action,

AAA

Author Detail:

Mr. Jeydel is a senior vice president, general counsel and corporate secretary at Kanematsu USA Inc., a major Japanese trading company. He has more than 20 years of experience in arbitration and mediation as an advocate, arbitrator and mediator. Mr. Jeydel serves on the board of directors of the American Arbitration Association, and on the AAA roster of neutrals. He is also a member of the Court of Arbitration for Sport in Lausanne, Switzerland, and is one of the founders of the first Inn of Court devoted to ADR.

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Description:

Originally from Dispute Resolution Journal

Advocates and arbitrators must all, from time to time, confront the old and as yet unresolved issues of consolidation of cases and joinder of parties. These related procedures, so well-defined and regulated in state and federal courts, continue to cause confusion and delay in a forum otherwise designed for ease of use and expedition. The problem resides in the fundamentally contractual nature of arbitration. If the parties to a dispute are not all signatories to the same arbitration agreement, absent their collective consent, there is no universal rule of “arbitral economy” that permits arbitrators, arbitration providers, or courts to order consolidation or joinder in the arbitration context.

Federal and State Law

There is no federal statute authorizing an arbitrator or a court to consolidate related arbitrations or to join a third party in an arbitration proceeding. The Federal Arbitration Act1 makes no mention of these procedures. The FAA, however, requires arbitration agreements to be enforced in accordance with their terms.2

Certain states, either by legislative enactment or precedent, do allow for consolidation by court order in certain circumstances.3 A few have even considered the special circumstances of international arbitration in this context.4 The number of states with legislation permitting consolidation is likely to increase as they enact the Revised Uniform Arbitration Act 2000 (RUAA), which expressly authorizes courts to consolidate separate arbitrations, as long as the parties’ agreements do not prohibit it.5

Section 10 of the RUAA permits a court to consolidate related arbitrations in the following circumstances: (1) the claims arise from substantially the same transaction or series of related transactions; (2) common issues of law or fact exist, creating the possibility of conflicting decisions; and (3) prejudice would result absent consolidation, which is not outweighed by the risk of undue delay, prejudice or hardship to the party or parties opposing consolidation.