Trends in Litigating Arbitration: Using Motions to Compel Arbitration and Motions to Vacate Arbitration Awards
Philbin, Donald R., Jr., Defense Counsel Journal
ARBITRATION has been used in commercial disputes since at least the 13th century. (1) George Washington included an arbitration provision in his will, (2) and arbitration remains the preferred choice for parties engaging in international transactions (3)--especially those involving foreign direct investment in another country. (4) Litigation in the home courts of the government who owes you money for a dam or power plant is an unattractive option. At home, some states have been hostile to arbitration while others have not. Congress reconciled those differences by adopting the New York approach in the Federal Arbitration Act ("FAA") of 1925. (5) The Supreme Court has interpreted the FAA broadly--Congress invoked the full preemptive power of the Commerce Clause, (6) stated a "national policy favoring arbitration," preempted inconsistent state laws, (7) and separated the arbitration clause from the surrounding contract for purposes of deciding who decides arbitrability. (8)
When court dockets clogged in the 1970s, (9) Chief Justice Burger convened the Pound Conference in 1976 to explore "multi-door courthouse" solutions that offered litigation alternatives. (10) The modern Alternative Dispute Resolution movement grew quickly from Pound. ADR has been well-received generally, and even the criticisms of arbitration are confined to relatively few categories of claims. Indeed, "there is little opposition today to arbitration between sophisticated commercial parties." (11) Still, "litigating arbitration" has been a conspicuous part of the dockets of the United States and State Supreme Courts in recent years. (12) Since written agreements to arbitrate are enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract," (13) litigants have sought to avoid arbitration by raising a variety of common law contract defenses, such as lack of assent, (14) lack of consideration, (15) administrative pre-emption, (16) unconscionability, (17) fraud and duress, (18) and material breach. (19) Beyond litigating arbitration, legislative efforts are pending in Congress and statehouses to expand or curtail the use of arbitration in specific contexts. (20)
This article examines litigation trends associated with the rapid expansion of private arbitration as a dispute resolution mechanism. (21) In particular, this article evaluates the two most common legal measures associated with arbitration proceedings, the Motion to Compel Arbitration, which attempts to enforce arbitration agreements against unwilling participants, and the Motion to Vacate Arbitration Award, which attempts to void the result of a consummated arbitration. This article traces the procedure underlying these motions, discusses trends in case law with respect to each of these motions, and considers the future role of each of these motions in practice.
I. DISPUTE RESOLUTION OPTIONS
Parties have options in resolving disputes. (22) They range from ignoring a problem (many go away and some get worse) to legislative or constitutional attempts to alter the playing field. Absent agreement between the disputants, litigation is the default mechanism. For the party desiring to avoid litigation, there are a wide number of choices, even within the broad categories of dispute resolution alternatives. (23) Mediation comes in flavors ranging from facilitating open discussions to actively helping parties put deals together and evaluating issues. It may be instructive to take a wide-angled look at some of the dispute resolution options available to parties negotiating deals or picking up the pieces of one that may have gotten off track. Here is a graphical depiction of many dispute resolution options.
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A. Pre-Dispute Actions
Arbitration is the focus of this article. There are a host of arbitration providers, and many of these administering agencies have specialized rules for different kinds of disputes. …