April 27, 2015
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April 24, 2015
Michigan Passes Revised Uniform Arbitration Act
On December 14, 2012, Michigan Gov. Rick Snyder signed into law Enrolled Senate Bill Nos. 901, 902 and 903. The first two of these merely apply the third to arbitration of disputes involving the Condominium Act and condominium agreements, and arbitration of domestic relations matters. The third, the Revised Uniform Arbitration Act (the Act), follows closely developments in the nationwide uniform arbitration act initiative of recent years. It codifies what has heretofore been a mish-mash of Michigan common law principles on private arbitration and adds significant "flesh" to the bare bones of Michigan's 1961 Arbitration Act, MCL 600.5001.
The Act deals with virtually the full spectrum of issues in private arbitration, including: 1) agreements to arbitrate; 2) the procedure for invoking and enforcing arbitration obligations; 3) the arbitrator's selection, ethical obligations and authority; 4) the process by which an arbitration award may be confirmed, vacated, modified or corrected; and 5) appeals from court orders compelling/denying arbitration, or confirming, vacating, modifying or correcting arbitration awards. Many of the Act's provisions will seem entirely predictable to practitioners already familiar with alternative dispute resolution or the nationwide uniform arbitration initiative, but several are worthy of special mention:
- Section 1, the Definitions Section, defines "Arbitration organization" as virtually any neutral entity that initiates, sponsors or administers arbitrations or is involved with arbitrator selection. It also defines "Record," a prerequisite to the finding of an agreement to arbitrate, as including information either inscribed on a tangible medium or stored in a retrievable electronic or other medium.
- Section 4 allows parties to an arbitration to waive or vary the effect of the Act's terms by agreement, but then specifies a long list of the Act's requirements that may not be waived pre-dispute, plus an equally long list of the Act's requirements that may not be waived by the parties at all.
- Section 6 makes it fundamentally clear the only issues to be decided by a court in an action to compel arbitration are: 1) whether a valid agreement to arbitrate exists between the parties; and 2) whether a particular controversy is subject to that agreement. All other issues are to be decided by the arbitrator, including most notably, alleged timeliness and other procedural irregularities. Elsewhere, the Act specifically forbids a court from refusing to order arbitration based on a finding the claim lacks merit or basis.
- Section 8 deals with provisional (maintenance of the status quo, usually) remedies pending arbitration by indicating such remedies may be the province of the courts before an arbitrator has been selected, but are the province of the arbitrator once selected except in the case where the matter is urgent and the arbitrator is unable to timely or effectively act.
- Section 10 provides specific guidance on when multiple claims between the parties may properly be consolidated upon court order.
- Section 14 bestows on arbitrators the same essential immunity from civil liability enjoyed by Michigan judges and makes arbitrators generally immune to forced testimony, whether by subpoena or otherwise.
- Section 16 codifies the parties' right to be represented by counsel in an arbitration proceeding.
- Section 17 deals with the arbitrator's subpoena and discovery powers. It essentially requires parties seeking access to such powers to deal with subpoenaed witnesses and other parties as if the arbitration proceeding were a civil action under Michigan Court Rules.
- Sections 20, 23 and 24 set forth very specific time limitations for motions to modify or correct an arbitration award (20 days after receipt of the award), replies to such motions (10 days following receipt of motion), and court actions to vacate, modify or correct and award (90 days following notice of the award).
- Section 21 codifies the grounds upon which an arbitrator may award punitive damages and reasonable attorney fees to a party. It also empowers an arbitrator to order other remedial relief as may be "just and appropriate," even if such remedial relief would not be available from a Michigan court.
- Section 23 also deals with the residue of a court's order vacating an arbitration award, indicating the circumstances under which the matter must be remanded to a new arbitrator, as well as those under which it may be appropriate to remand the matter to the same arbitrator.
The Act becomes effective July 1, 2013 and expressly does not apply to any action or proceeding commenced, or right accrued, prior to its effective date. While it contains few surprises, it should not only hopefully provide solid guidance, but also simplify and decrease litigation over enforcement of arbitration agreements and enforceability of arbitration awards.