Understanding Michigan’s new RUAA

Understanding Michigan’s new RUAA

Alternative Dispute Resolution (ADR) is an effective resolution tool, in the right hands. Now, with updates to Michigan’s long-standing arbitration statutes through the Revised Uniform Arbitration Act (RUAA), as of July 1, 2013, our state joins several others across the country in adding strength and control to this increasingly popular legal remedy.

Benjamin Franklin once lamented, “When will mankind be convinced and agree to settle their difficulties by arbitration.” With more and more organizations and individuals opting for this form of dispute resolution, the answer may be, sooner than you might think.

There are situations where going to trial is absolutely the best course of action. However more and more, businesses, entities and individuals are opting for alternative ways of resolving their differences before ever stepping foot inside a courtroom.

What is arbitration?

In arbitration, parties mutually agree to submit their differences to an impartial person (called an arbitrator) or group of arbitrators (called a panel) for resolution. The arbitrator’s job is to review the parties’ agreements, other documents and information submitted by the parties, and to make a decision.  While the process looks like a traditional trial, it is in fact less formal than presenting a case before a judge, because an arbitrator has more flexibility in reviewing the evidence and rendering a decision (judges are often constrained by rigid rules of evidence and procedure).  Arbitration is also designed for speed and efficiency by allowing parties significant control over selection of the decisionmaker, as well as creating a process that takes into consideration the needs of the parties.

Michigan’s RUAA replaces arbitration law that hadn’t been updated in more than five decades. The new legislation is intended to make the arbitration process more efficient and even more cost effective. It also provides guidelines for conducting arbitration.

Important provisions of the RUAA

The following are some of the most important provisions of the RUAA, from the 2009 White Paper by Mary A. Bedikian who is director of the ADR program at Michigan State University College of Law. She is a former Vice-President of the American Arbitration Association, and a former Chair of the State Bar of Michigan’s ADR Section.  Her work served as the basis for the new RUAA.

Electronic Records –The old Uniform Arbitration Act (UAA) was adopted at a time when virtually all commerce was conducted through paper transactions. The RUAA provides for the use of electronic records, contracts and signatures.

Non-waivability of Provisions – The RUAA recognizes that party autonomy may be trumped by the need to maintain some basic level of fairness. This section embodies the freedom of contract notion up to the point where varying arbitration terms may result in a violation of applicable law.

Determinations of Arbitrability – The prior arbitration statutes were silent on the issue of arbitrability (whether or not a party’s dispute must be arbitrated). The RUAA provides that courts will determine whether or not an agreement to arbitrate exists. An arbitrator, however, will determine procedural issues of arbitrability, such as timeliness, and whether conditions precedents to filing have been met.

Arbitrator Disclosures – The RUAA provides specific disclosure obligations requiring arbitrators to disclose known financial interests or personal relationships that could affect their impartiality.

Discovery – The RUAA recognizes that parties in arbitration may require some form of evidence to advance their case. The revised law authorizes arbitrators to order pre-hearing discovery but to do so only when “appropriate in the circumstances, taking into account the needs of the parties to the arbitration proceeding and other affected persons and the desirability of making the proceeding fair, expeditious, and cost effective.”

Change of Award by Arbitrators – The RUAA permits parties to seek clarification [in case of ambiguity or technical/computational error] directly with the arbitrator, rather than having to petition a court to re-instate the arbitrator’s authority for this purpose.

Remedies – The RUAA also retains the general proposition that arbitrators may award broad forms of relief. Such broad forms may exceed the type of relief a court grants. However, under the law, limits are placed on the arbitrators’ remedial power to award attorneys’ fees and punitive damages (damages intended to “punish” a party for its conduct).

Conclusion

The RUAA is a greatly improved statute that will offer those who choose arbitration greater control and predictability in the process, along with lowering associated costs and shortening the time it takes to resolve disputes.

About the author:

 Erika Davis is a Detroit-based lawyer with more than 10 years of experience helping all types of clients, including individuals and businesses. Many of her clients are small to medium sized businesses in both profit and nonprofit sectors. She specializes in Alternative Dispute Resolution, helping her clients resolve their differences outside of the courtroom.  She serves as an arbitrator with the American Arbitration Association, and offers mediation services through American Settlement Centers.

 

 

 

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