Originally from World Arbitration and Mediation Review (WAMR)

Preview

I. INTRODUCTION

It has been sixty years since the Supreme Court set forth the bedrock principle that “a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”   And yet numerous cases exist where just the opposite is true.  In fact, a quarter century earlier the Supreme Court took the opposite position, affirming a decision that upheld a Minnesota statute requiring disputes involving fire insurance policies be subject to mandatory arbitration, regardless of the fact that the policies themselves did not contain an arbitration clause.  This, the Court explained, was because “the procedure by which rights may be enforced and wrongs remedied is peculiarly a subject of state regulation and control.”  

These seemingly incongruous statements are in truth a reflection of two distinct forms of dispute resolution: contractual and judicial arbitration. The former involves an agreement entered into by parties who desire to prevent potential disputes from being litigated in court.  The latter is a nonbinding form of arbitration, mandated by statute, court rule, or regulation, with the goal of reducing the backlog of cases awaiting trial.  However, although the awards in these mandated arbitrations are not enforceable without both parties assenting, a number of the programs contain provisions whose sole purpose is to dissuade dissatisfied parties from pursuing a trial de novo.  These deterrents, which include requirements that an unsuccessful party pay its opponent’s arbitration costs, court costs and reasonable attorney’s fees, have been upheld despite a number of constitutional challenges.

This article will examine the process by which an arbitration is initiated.  The first section will discuss various aspects of pre-dispute and post-dispute arbitration agreements, the time requirements of various administrating organizations to initiate arbitration, and what is needed to compel arbitration when one party attempts to litigate the dispute. The second section contains a state-by-state survey of court-mandated arbitration programs, including provisions to discourage parties from seeking a post-award trial de novo.  The article concludes with a discussion of constitutional challenges that have been made against court-mandated arbitration, ranging from claims that the programs infringe upon a party’s right to trial by jury, due process and equal protection, to the contention that the mere enactment of the legislation authorizing the creation of these programs constitutes a violation of the separation of powers doctrine.