commercial arbitration class 11

preclusive effect of awards and of court decisions.

preclusive here doesn't mean stare decisis, but instead res judicata. basically, where we have more than one preceeding between the same parties and there has been either a resolution of a claim or resolution of the fact issue in one case and the issue is what impact that should have on the other case.

last week we discussed a party bringing multliple claims, some of hwich are arbitrable and some are not. like a contractor who sues for breach of contract and gender discrimination. the Bok is arbitrable but the gender discrimination is not, perhaps because of arbitrable rules. turns out teh executive was terminated for certain reasons (?). if the arbitration was done, determination for cause means that there was no determination of a prescribed reason -- the other parts of the case may not be arbitrable in court.

pre SEC arbitration mandates, if there was a case where there were state claims
federal claim requires intent as well as substandard conduct, so very hard to see how the customer could win.

res judicata - ultimate legal conclusion.  if the claim is brought with opportunity to litigate and then the claim arises in a later case, the first is determinative even if a party has new evidence.

preclusion: clients often try to get two bites at the apple

once you get beyond very small consumer claims, particularly in business area where there's significant amounts of money at issue, the idea of arbitration being final is somewhat fanciful. the fact is that as rarely as awards are overturned/modified, there are thousands of attempts in the courts to get awards tossed out. so much so that in NYS, the complaint intake report in court has "arbitration" as an option.

courts don't like to fix arbitation because either they can't tell what happened or else there's so much stuff to go through.

** must get the arbitration transcribed**

new frontier in arbitrable theory: now there is potential for there to be a meaningful expansion in judicial review particularly if that is what the parties want to have. up till now, if the parties wanted any type of meaningful arbitrable review, they had to do an appellant arbitration.

what is full judicial review? what do the appellate courts do?

most cases involve both trial and appellate court review. same with arbitration.

challenges to the correctness of an arbitration award:
- not allowing them to put the case in a certain way
- acting in excess of arbitrable power (but you can't really bootstrap them to this). if the arbitrator decides something incorrectly, that's beyond the power. but there's nothing having to do with mistake in the rules/statute. it's left to the court or to remand to the arbitrators.

there are even arbitrators that won't follow the court (i.e., ACS)

ouster situations: the courts of equity sometimes intervened for fraud, but the courts did not take the cases on the merits. which is interesting because this was back when courts didn't feel that parties should have to be bound to arbitration.
1. but parties have always been free to settle their own case if they would like to
2. judges can be either/both idiots or overworked. juries are great if you were hit by a city bus or you're walking around in a cast, but they mess cases up all the time too.

but there's more to it.
- business skills and continuity
- confidentiality 
- compromise
- custom of trade industry (laws of the shop, in unions and labor law)
- customs of cultural/religious groups

even in the arbitrable canon of ethics, there's nothing that says the arbitrator must apply the law! in emperical tests, they found that arbitrators would often apply the law and were often interested in the law but always felt that they had the right to make equitable judgments beyond the scope of the law.

"we're not dealing with mathematics"

trial court however is subject to broad appellate scrutiny. but arbitration is not. perhaps this is because its' supposed to be quicker and less expensive, and that arbitration is final.

why this impetus for broadening review?
look at what SCOTUS has done over the past 25 years in pro-arbitration:
1st - took the FAA and definied interstate commerce such that nothing except guns and abuse are IC.
2nd - told states that they must include FAA
3rd - held that statutory claims like mandatory statutory claims are arbitrable as well

it's not as if the states don't have significant restrictions on review, but you don't hear about those in these cases.

what did the SCOTUS tell us in regard to statutory claims?
when they said that they weren't arbitrable, one of the reasons for this was that the only way you can overturn an award was for "manifest disregard" (of the law) which isn't a material factual or legal error: those are not enough. the thinking behind it was that arbitrators like trial courts make presumptively correct rulings.  SCOTUS would bring us manifest disregard as early as 1995, questioning whether arbtrability could be assigned tot he arbitrator. the court has enough residual control over the process to ensure that rights are vindicated. so there was at least talk of expanding judicial review in statutory cases.

what happens when the parties themselves want to provide for arbitrated judicial review themselves? the law right now is not clear on this, but it is a "coming attraction" to this area. and there is some doubt as to whether the arbitration allows post proceedings in state court.... a lot of things up in the air

good for a law review topic...

just because the arbitrator decides differently than a court would does not make the judgement fundamentally unfair.
- botched discovery
- gross abuses of discretion
- witness must be "absent" in court

the no-nos?
fraudulent allegations to get out of a contract, and the principle in one party is the only one who knows what was/not said. the party who needs his testimony asks for an adjournment because the man's wife is very ill. the arbitrator said, no adjournment because we dont' need his testimony. the court remands on the theory that there was no opportunity to put in a case.

discovery. everything electronic is discoverable. it's the responsibility of the attorneys to tell their clients taht if there's even a slight chance of litigtation, don't touch/destroy anything. if you can show that you were denied essential discovery, you may have an argument. but it's extremely difficult to do so.

what can arbitrators do when someone is being recalcitrant?

arbitrators and lawyers in NYS have subpoena power. 


even an arbitration can be very expensive.