Arbitration Overhaul

Governor Rick Snyder recently approved the Revised Uniform Arbitration Act (RUAA) – the first major change to Michigan’s arbitration process in over 50 years.  The statute takes effect on July 2013 and is expected to allow arbitrators to better manage their cases as well as safeguard the due process rights of the participants.  The act also gives arbitrators immunity from civil suits, similar to Michigan judges.

One of the big reasons for the change is an effort to decrease the cost of arbitrating disputes.  In many cases, the costs of arbitration have become just as high, and in some cases higher, than traditional litigation in the courts.

In order to control costs, the RUAA gives arbitrators more ability to steer the course of discovery.  For example, an arbitrator can limit the number of depositions and interrogatories.  Also, arbitrators now have the judge-like ability to issue subpoenas to require third parties to attend or provide documents.

The old arbitration act was written in 1955 and was a bare bones, archaic statute with very few actual guidelines on arbitration – in essence, there was no guidance in Michigan.  The old act didn’t even include a method to actually start an arbitration.  With the current widespread use of arbitration in contracts and scenarios not traditionally subject to arbitration, the old act became insufficient to meet modern needs.  RUAA adds procedural components and addresses issues that have arisen in case law in order to provide more certainty in arbitration proceedings.

The act also has several provisions dealing with modifications or corrections of awards made by arbitrators.  Critics of the act have voiced concern that this will cause some practitioners to “shoehorn” their facts into the very narrow grounds allowing a court to modify or correct an arbitration award.  However, arbitrators have always dealt with notion that courts have the power to confirm or vacate arbitration awards on specific, though limited, legal grounds.

If you have questions about arbitrations, or any other legal topic, contact John Walsh or Matt Worley at Fausone Bohn, LLP at (248) 380-000 or online at www.fb-firm.com.