When there is a dispute between two or more parties, they may elect to have it resolved by the arbitration process rather than by litigation. Arbitration is generally regarded as being both quicker and cheaper than litigation. The rules governing arbitration have recently changed in Pennsylvania. The older law, the UAA or Uniform Arbitration Act, was adopted in 1980. As of July 1, 2000, the RUAA or Revised Uniform Arbitration Act was created, replacing and updating the previous law. However, Pennsylvania did not adopt it until 2019, joining twenty other states.
What is Arbitration?
In a legal dispute, both parties have the right to have their disagreement argued by a lawyer and settled before a judge. Either party also has the right to appeal a decision they do not agree with to a higher court. However, if both sides agree, they may opt to argue their case in front of arbitrators. Arbitration has many pros that suit certain types of disagreements along with several cons. Many agreements associated with consumer products and services, like credit cards and travel agencies, have resolution by arbitration built in.
Most elements of arbitration will be familiar to those who have experienced a courtroom or seen a trial on television. Attorneys argue the case and present opening and closing statements, there is a discovery phase, and evidence is presented. Arbitration may be binding or non-binding.
One significant advantage of arbitration is the parties’ ability to have a say in the selection of their arbitrator or panel of arbitrators. In many arbitration cases, arbitrators with special knowledge are available when a more in-depth understanding of the matters at hand is required.
Unlike in a trial situation, arbitration is governed by a contract that may stipulate things like a timeline and special rules that apply to the proceeding. As stated above, evidence is presented, witnesses are heard from, and arguments are made, but these are typically simplified so that a decision can be reached without delays and endless appeals.
Arbitration may be applied when one or both of the parties is concerned about privacy. Unlike courtroom proceedings, arbitration hearings are not typically entered into the public record.
Changes in the Arbitration Law
Having been drafted in the 1950s, the UAA was out of date for the needs of modern disputes and so was replaced with the RUAA. The drafters of the RUAA attempted to fill in gaps in the UAA and bring state law into closer alignment with federal law. Arbitration agreements that were signed prior to July 1, 2019 in Pennsylvania may elect to abide by the RUAA; those signed afterwards are bound by its provisions.
Changes to the RUAA include the following:
Express Authority of Arbitrators: The updated act expressly grants arbitrators many of the powers vested in judges, discussed here below.
Discovery: The RUAA expands arbitrators’ discovery powers to give them authority that is closer to a judge’s, allowing them to take discovery from non-parties, create rules governing discovery procedures, and issue subpoenas and protective orders.
Initiation of Arbitration: The new law delineates the provisions governing the initiation of arbitration. All parties must be served notice in writing or electronically regarding the dispute and the remedy that the plaintiff seeks. Should these procedures not be followed, a court may later strike down the award decided on by the arbitration proceeding.
Obligation to Disclose: The new law requires all arbitrators to disclose any past or present relationships with anyone involved in the proceedings, including parties, their attorneys, witnesses, and any other arbitrators appointed to the panel. They must also disclose any information they have that could affect their ability to be impartial along with any potential gain they could acquire from the outcome of the arbitration. Failure to follow this regulation could allow a court to subsequently vacate their decision.
Immunity: The RUAA specifically grants immunity to arbitrators along the same lines as a judge in order to attract a greater pool of arbitrators.
Consolidation: The new law provides that related arbitration actions may be combined.
Right to Waive Provisions: The RUAA allows some flexibility in the adoption of its provisions. This includes allowing an arbitrator to decide whether arbitration or litigation is warranted for the disagreement at hand and to define the scope of the discovery phase. Other matters are fixed, such as enforcement or appeal of a decision in court.
Punitive Damages: Under the RUAA, arbitrators are empowered to adjudge any remedies that they believe are warranted in the situation. Any punitive damages must be defended by reference to both law and fact.
Consumer Considerations
When you sign your name to a contract with any company, it is important to understand the agreement you are entering into. It may require you to resolve any dispute you have by arbitration, thus narrowing the scope of your legal rights. Pay special attention to any paperwork you sign from companies such as health care providers, credit card companies, and retailers. You must be notified in writing as to any amendment to such an agreement, so take the time to read these carefully. Do not sign anything that makes you feel uncomfortable; speak to a lawyer or consider another company that does not force you into unwanted arbitration.
Donaghue & Labrum
With decades of experience fighting on behalf of clients throughout Montgomery, Delaware, Chester, Lancaster, and Berks counties, the attorneys of Donaghue & Labrum put your interests first. We aggressively pursue the maximum award for your case so that you and your family can focus on recovering from your injuries. Contact us today for more information regarding whether arbitration may be the best course of action for your case.