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The Federal Arbitration Act (“FAA”) guarantees the enforceability of private agreements to arbitrate, but guarantees a federal forum to compel arbitration only some of the time. State courts are bound to give effect to the FAA in enforcing agreements to arbitrate, and limitations on federal subject matter jurisdiction often will require that they do so. Section 4 of the FAA provides for a civil action whose sole purpose is to obtain an order to compel a recalcitrant party to arbitrate. No court action concerning the underlying dispute need be pending; the Section 4 petition is an independent proceeding. It permits…
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Last summer I published a commentary in the Mealey’s Class Action Report entitled Unconscionable Consumer Class Action Waivers and the Federal Arbitration Act. (located on my website, www.lexmarc.us/Documents/Consumer_Class_Action_Waivers.pdf) The article reported on the trend of federal cases to find the clauses requiring all claims to be resolved in individual, non-class arbitration are unconscionable under state law, and that non-enforcement of arbitration agreements to the extent of refusing to give effect to the class action waiver does not violate the Federal Arbitration Act. That commentary was critical of a decision of the United States Court of Appeals for the Third Circuit,…
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The U.S. Court of Appeals for the Second Circuit has held that a class action waiver in an arbitration clause that operates in practice to stifle prosecution of federal antitrust claims, violates public policy and therefore is invalid under the Federal Arbitration Act (“FAA”). In re American Express Merchants’ Litigation, 2009 U.S. Dist. LEXIS 1646 (2d Cir. Jan. 30, 2009). Whether the decision will affect the economic balance between consumer products companies and their customers is difficult to predict. Consumer services companies have sought over the last decade to limit their exposure to class-wide damages judgments by requiring claims to…
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I report today on an unusual case, involving a rarely-encountered issue. The case, decided by a U.S. District Judge in New York in the last days of 2008, is Vistra Trust Co. v. Stoffel, 2008 U.S. Dist. LEXIS 106493 (S.D.N.Y. Dec. 29, 2008). The issue: the right of a litigant to transfer a case filed in state court to a federal court (in federal practice parlance, “removal”) when the case involves an arbitration agreement or award governed by the U.N. Convention on Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”). In Vistra, a family trust brought fraud claims…
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“Do-Overs”: A New Installment in the Law of Reconstituted Arbitral Tribunals By Marc J. Goldstein Do-overs are much-discussed in the news, as the President and Chief Justice of the United States decided, in an abundance of caution, to re-enact the administering of the Constitutionally-mandated oath of office in a White House ceremony attended by roughly 500 million fewer people than witnessed the original stumbling performance at mid-day on January 20, 2009. Do-overs in arbitration are again a topic of discussion, after the recent decision of a federal district judge in New York that ordered an arbitration to start anew and…
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Dear Readers In the coming weeks I will argue a case in the United States Court of Appeals for the Second Circuit that involves a rarely addressed arbitration issue: the power of the arbitrator to make corrections in a final award by issuing an amended final award. I will therefore not discuss the issue at length in this posting, reserving full commentary until after the Second Circuit decides the case. But a brief synopsis of the issue is in order. Virtually all institutional and ad hoc rules governing international arbitrations provide, in nearly identical terms, that the arbitrator may correct…
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