BINDING ARBITRATION FEDERAL V. PRIVATE - Dispute Resolution Journal - Vol. 55, No. 2
The author is vice president of government programs with the American Arbitration Association, and has extensive experience as a mediator and trainer.
Originally from Dispute Resolution Journal
Use of binding arbitration by the federal government is a fairly recent occurrence. It is not surprising, therefore, that potential users can be confused by the rules that govern use of the process within the federal context. This article will discuss the procedural differences that exist between the executive, legislative, and judicial branches, as well as between the federal and the private sectors’ use of consensual and compulsory binding arbitration.
Executive Branch Use of Binding Arbitration
Prior to 1995, Executive Order No. 12778 forbade litigation counsel for federal agencies from seeking or agreeing to enter into binding arbitration.1 On Sept. 7, 1995, the solicitor general issued an opinion stating that the Constitution does not prohibit federal agencies from entering into binding arbitration.2 In 1996, Congress passed the Administrative Dispute Resolution Act (ADRA).3 The ADRA permits the use of consensual binding arbitration by executive branch agencies subject to the following specific requirements.
Prior to using binding arbitration, the head of an agency must issue guidance on the appropriate use of binding arbitration and under what conditions an officer or employee of the agency is authorized to settle a dispute using binding arbitration. The guidance must be drafted in consultation with the attorney general and take into account the factors that preclude the use of ADR, as described in 5 United States Code section 572.4 In addition, the agency must develop a policy with regard to the representation of parties in ADR proceedings by persons other than attorneys. This policy must address the issues raised in Section 9 of the ADRA.5
To authorize the use of binding arbitration, an arbitration agreement must be executed. Execution may occur either before or after a dispute has arisen. An agency, however, may not require any person to consent to arbitration as a condition of entering into a contract or obtaining a benefit. The arbitration agreement must set forth the subject-matter to be submitted to the arbitrator, specify a maximum award that may be issued by the arbitrator, and indicate other conditions, if any, limiting the range of possible outcomes. An officer or employee of an agency may not sign the arbitration agreement unless that individual has independent authority to settle the matter or the individual has been specifically authorized by the agency to consent to the use of arbitration.