Alternative Dispute Resolution
containing it. Even if the entire contract is itself an arbitration agreement, the severability rule requires a trial court to isolate the “precise agreement to arbitrate” that a moving party seeks to enforce from other portions of the larger contract. “Application of the severability rule does not depend on the substance of the remainder of the contract” “Section 2 [of the FAA] operates on the specific ‘written provision’ to ‘settle by arbitration a controversy’ that the party seeks to enforce.” Id. Because Rent-a-Center, West proscribes a trial court’s
review of the remainder of a contract to ascertain whether an arbitration provision specifically challenged by a party is, in fact, valid and enforceable, to withstand subsequent review, any intended challenge to the enforceability of an arbitration provision must focus with precision on the specific points that vitiate the parties’ agreement to arbitrate. Even if you are successful in convincing a judge to decline enforcement of an arbitration provision, to the extent your attack was based on broad claims of unconscionability, fraud, or the like that failed to focus on the “precise agreement to arbitrate,” all you have done is create a federal issue for the losing party that is unlikely to come out well for your client in the long run.
Collateral Attacks on Arbitration Awards: Added Potential for Undue Delay and Expense
Although arbitration is intended to promote “the quick
resolution of disputes and the avoidance of the expense and delay associated with litigation,” Tree S Delaware, Inc. v. DataQuick Info. Sys., Inc., 492 F.3d 520, 527 (4th Cir. 2007), it can, albeit in rare circumstances, result in proceedings as expensive and protracted as ordinary litigation. Take, for instance, an arbitration participant who attempts to circumvent the review and enforcement procedures under the FAA and instead challenges the arbitral award and the process leading to it by collateral attack on other arbitration participants, the arbitrator, and others. Te FAA limits judicial review of arbitral awards to
preserve their finality and avoid the delay and expense of litigation. Tree S Delaware, 492 F.3d at 527; Remmey v. PaineWebber, Inc., 32 F.3d 143, 146 (4th Cir. 1994); see ANR Coal Co. v. Cogentrix of N.C., Inc., 173 F.3d 493, 496 n.1 (4th Cir.. 1999) (“Te FAA sets forth the sole method to challenge an arbitration award – by serving a motion to vacate within three months of the rendering of the award – and does not permit a party to initiate a challenge to an arbitration award by filing a complaint.”) (internal citations and quotations omitted). Given that even direct judicial review of an arbitral award is “‘substantially circumscribed,’”Tree S Delaware, 492 F.3d at 527 (internal citation omitted), it is hardly surprising that collateral attacks on such awards are not allowed; if they
Human beings are standing by.
Call now.
IME’s, Internal Medicine, Physical Therapy
were, the value of arbitration as an alternative to litigation would be destroyed. Id. Moreover, allowing collateral attacks on arbitral awards would contravene the specific and limited grounds to attack an award that the FAA sets forth. Allowing collateral attacks would also contravene well-established precedent holding that courts may not reconsider the merits of arbitral awards. See, e.g., United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 38-39 (1987); Remmey, 32 F.3d at 151.
Tus, an unsuccessful party to arbitration cannot
resurrect its challenges to an award under the FAA as new claims in a civil complaint against the opponent and other arbitration participants. “[W]here a party files a complaint in federal court seeking damages for an alleged wrongdoing that compromised an arbitration award and caused the party injury, it ‘is no more, in substance, than an impermissible collateral attack on the award itself.’” Decker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 205 F.3d 906, 910 (6th Cir. 2000) (quoting Corey v. N.Y. Stock Exch., 691 F.2d 1205, 1211-12 (6th Cir. 1982)). Te rationale for the rule, regardless whether the complaint is filed in federal or state court, is simple: the FAA – Sections 10, 11, and 12, in particular – provides the exclusive method for challenging an arbitral award. Corey, 691 F.2d at 1212.
DrGaber.com
341 N. Calvert Street, Suite 300 Baltimore, MD 21202 410.986.4400
1838 Greenetree Road, Suite 445 Pikesville, MD 21208 410.653.8840
Seven Square Office Park 9110 Philadelphia Road, Suite 206 Rosedale, Maryland 21237 410.986.0048
GAB00409_Trial Reporter
Ad2.indd 1 Trial Reporter / Fall 2010 3912/15/09 3:24 PM
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60