Latest Effort Underway to Remake Arbitration Law in Conn.
My latest piece for the Connecticut Law Tribune:
Legislation that would provide a wholesale update to Connecticut arbitration law for the first time in a half-century, an effort that's failed several times already, recently received a hearing in the General Assembly and appears ready to gain traction.
Advocates of adopting the model "Revised Uniform Arbitration Act" (RUAA) are hoping that 2017 will be the year the legislation will finally be passed.
By the count of Barry Hawkins, the bill has been introduced four times since the National Conference of Commissioners on Uniform State Laws promulgated the law in 2000.
Hawkins, a partner with Shipman & Goodwin who testified in favor of the bill on Monday on behalf of the Connecticut Bar Association's Alternative Dispute Resolution Section, said proponents of the bill have made tweaks to address concerns of the groups that were opposed to the bill in the past.
For example, labor unions were concerned that the proposed law would affect their collective bargaining agreements and their grievance processes, Hawkins said. The proposed law makes it clear that collective bargaining agreements are excluded, he said.
Other opponents were concerned that the law would pre-empt punitive damages, but advocates have made clear that—just like Connecticut's current arbitration law—judges and arbitrators still have the ability to award punitive damages if the law provides for it, said Hawkins, who also is a member of the Uniform Law Commission and helped draft the RUAA.
"Hopefully all the opposition has been satisfied," Hawkins said.
Houston Putnam Lowry, a lawyer with Polivy, Taschner, Lowry & Clayton who also testified in favor of the RUAA, said he thinks the legislation may have legs this year because House Rep. William Tong, one of the co-chairmen of the Judiciary Committee, has expressed an interest in enacting legislation to make the state's legal environment friendlier to businesses.
Tong previously introduced an omnibus bill that proposed adopting a version of the Delaware Rapid Arbitration Act, but the Bar Association's ADR section asked Tong to consider support for the RUAA instead, Lowry said.
The Delaware law prevents parties from designing the arbitration process they want to use, while the RUAA fills in the gaps in arbitration agreements that parties have already agreed on in principal, Lowry said.
Tong did not respond to a request for comment.
Harry N. Mazadoorian, an arbitrator and a senior fellow at Quinnipiac University School of Law's Center on Dispute Resolution, said the time is ripe to reform Connecticut's arbitration law because the state is in a fiscal crisis and Connecticut courts are facing budget cuts.
"This is the one time we don't want to discourage arbitration as an alternative to our courts," Mazadoorian said.
One of the advantages of the RUAA is that it would explicitly put on the books that arbitrators are empowered to grant preliminary relief, including provisional remedies, Lowry said. Right now, prejudgment remedies are authorized only by case law, which has put a "judicial gloss on the statute," Lowry said.
The law also would require arbitrators to disclose "facts which might call the arbitrator's impartiality into question," Lowry said in his written testimony.
The RUAA also provides default positions if parties have not already addressed those positions in their arbitration agreements, Mazadoorian said.
The bill enforces arbitration agreements contained in electronic documents, he added.
Raphael L. Podolsky, public policy advocate for Connecticut Legal Services, proposed an amendment to the RUAA that would prevent the use of "rights enforcement disabling clauses" in all consumer contracts, whether they are enforced through the courts or arbitration.
Podolsky said in his written testimony that such clauses restrict consumers from getting punitive damages, fail to provide for the waiver of fees and costs for consumers who can't afford them, and force consumers into forums that are geographically distant and more costly than their home state courts.
Podolsky also said applying the amendment to consumer contracts that are enforceable through arbitration or through the courts would avoid a Connecticut version of the RUAA being deemed pre-empted by the Federal Arbitration Act.
The proposed amendment is based on something similar in New Mexico, Podolsky said.
Hawkins and Mazadoorian both said they think the proposed amendment Podolsky raised would run afoul of the FAA itself.
Most alternative dispute providers have built-in protocols against unfair consumer arbitration provisions, Mazadoorian said. For example, many providers won't accept consumer cases requiring consumers to travel from Connecticut to Washington in order to pursue their dispute, or won't accept cases requiring substantial sums in arbitration fees, he said.
If enacted, the RUAA would go into effect Oct. 1.
Eighteen states and the District of Columbia have enacted the RUAA.
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