Arbitration's counter-narrative: the religious arbitration paradigm.

• Author: Helfand, Michael A.
• Position: Continuation of III. The Doctrine of Arbitration's Counter-Narrative through Conclusion, with footnotes, p. 3023-3051 - Arbitration, Transparency, and Privatization: Contextualizing and Analyzing Recent Developments in U.S. Arbitration Regimes

1. Defining Arbitration

   It is far from surprising that debate over the degree to which arbitration can be equated with adjudication continues to animate a wide range of doctrinal questions. The FAA fails to provide a definition for arbitration, (112) and this gap has required courts to fashion their own definitions when the issue arises. (113) When courts have attempted to fill this definitional void, they have at times reflexively reached back to the standard arbitral narrative, concluding that arbitration is functionally equivalent to litigation and therefore qualifies as a "judicial proceeding." And, in the instances where courts have resisted this functional equation between arbitration and litigation, they have gone to the opposite extreme, concluding that arbitration should never be equated with litigation. (114)

   By contrast, emphasizing arbitration's counter-narrative provides reason to resist these extremes. The fundamental differences motivating parties to enter different arbitral for a require a more context-sensitive approach to the equation of arbitration and litigation. Notably, where parties aspire to infuse the arbitral process with the parties' shared values, applying rules that govern "judicial proceedings" to arbitration creates problems of fit. To see how, consider the following recent example.

   In Bauer v. Bauer, the Supreme Court of New York evaluated competing motions to confirm and vacate a religious arbitration award issued by a rabbinical tribunal. (115) Among the grounds raised to vacate the award was an allegation that some of the arbitration proceedings were conducted on Sunday. (116) To be sure, none of the statutory grounds for vacating an arbitration award included circumstances where the proceedings took place on Sunday. (117) However, New York's Judiciary Law provides:

   A court shall not be opened, or transact any business on Sunday, nor shall a court transact any business on a Saturday in any case where such day is kept as a holy day by any party to the case, except to receive a verdict or discharge a jury and for the receipt by the criminal court of the city of New York or a court of special sessions of a plea of guilty and the pronouncement of sentence thereon in any case in which such court has jurisdiction. (118) While this statute does not reference arbitration, the court advanced the following syllogism. A judicial proceeding cannot take place on Sunday. "Arbitration is a judicial proceeding and arbitrators perform a judicial function." (119) Therefore, "the arbitration proceedings and award herein are void upon the ground that at least one hearing was held on a Sunday." (120)

   Some have criticized the logic of Bauer on constitutional grounds. (121) And a number of other states have reached different conclusions in applying their own no-Sunday rules--with some holding that arbitration cannot be compared to adjudication (122) and others holding that parties to arbitration can contract around no-Sunday prohibitions. (123) But Bauer v. Bauer appeared to faithfully follow nearly 200 years of precedent in New York, which had subsumed arbitration--at least for these purposes--under the rubric of adjudication. (124) In Brody v. Owens, the New York Appellate Division equated arbitration to adjudication for the purpose of New York's no-Sunday statute, holding that "[t]he statute expresses the public policy of the State, and cannot be waived." (125)

   Indeed, Bauer is not the only recent decision employing this syllogism. In Terrace View Estates Homeowners Association v. Bates Drive Condominium III, another New York Supreme Court addressed a case where a rabbinical arbitration tribunal issued an award after holding arbitration proceedings on Sunday. (126) In deciding the case, the court once again embraced a familiar mantra: "Arbitration is a judicial proceeding and arbitrators perform a judicial function and therefore arbitrations are held to the same rule of law as are Courts." (127) Having embraced this mantra, the court reached what it deemed to be an inevitable conclusion--that it "ha[d] no choice but to vacate the Arbitration Award." (128)

   While both Bauer and Terrace View may have been well grounded in New York state precedent, it is hard to justify their methodology. Bauer and Terrace View embrace the standard arbitral narrative that conceives of arbitration as akin to litigation because both "perform a judicial function." (129) And because both arbitration and litigation provide a method for resolving disputes, they can be equated for the purposes of the no-Sunday rule. (130)

   By contrast, viewing Bauer and Terrace View through the lens of arbitration's counter-narrative yields a very different analysis. Arbitration's counter-narrative highlights the way in which not all arbitrations aim to achieve the same set of purposes. As a result, arbitration and litigation cannot be easily conflated under the single rubric of "judicial proceedings." Judicial consideration of such cases must therefore begin by evaluating the nature of the parties' decision to resolve the dispute before a rabbinical court.

   For example, in Bauer, the parties to the dispute were all siblings asserting ownership over various assets. (131) The parties signed the agreement post-dispute, having a full sense of what that agreement entailed. (132) The agreement required the arbitrators to resolve the dispute in accordance with either Jewish Law or p'sharah (133) p'sharah serving as a form of compromise that Jewish law embraces and, according to some, infuses with theological significance. (134) The parties could have pursued litigation in this matter or chosen another arbitral forum to resolve the dispute. But instead they chose to submit the dispute to a rabbinical tribunal and to have that tribunal apply religious rules in resolving the dispute.

   In such circumstances, conflating arbitration with adjudication--on the grounds that both serve judicial functions--is a mistake. The parties in Bauer chose their selected forum not simply because it would generate a binding judgment. More important, it was a forum that would resolve their dispute in accordance with religious rules and values that the parties shared. Thus, the Bauer parties' chosen process of dispute resolution had what might best be thought of as a theological or ritualistic component. (135) And because the parties all embraced a shared religious worldview, the selected rabbinical tribunal was not simply serving a "judicial function"; it was also serving a religious function, leveraging the shared religious worldview of the parties. (136)

   In this way, the religious tribunal provided a degree of "arbitral solidarity" by enabling the parties to "resolve [their] dispute[] in [a] tribunal [] that [was] more sympathetic to their basic world views than the courts of the dominant culture [were] prepared to be." (137) This is particularly true given that the no-Sunday rule at stake has its roots in a Christian tradition that the parties very well may have viewed as at odds with their own worldview. (138) Consequently, conflating arbitration with adjudication in this context directly undermined the goals both the parties and the forum were trying to achieve. Arbitration, as a category, is simply too multifaceted for such a reductive classification.

   It is worth noting that at least one New York decision appeared to take the religious function of a rabbinical arbitration tribunal into account when declining to vacate an award for violating the no-Sunday rule. In Isaacs v. Beth Hamedash Society, (139) the court considered a case in which a religious dispute was submitted to a rabbinical court with the arbitration proceedings taking place on Sunday. In holding that the Sunday proceedings did not subject the arbitrators' award to vacatur, the court stated the following:

   The defendants having consented to settle by arbitration, at the instance of one of their prominent ministers, a controversy growing out of the wants or requirements of their religious rites, with the special view of preventing its becoming a matter of public litigation, and the parties and witnesses having attended voluntarily for that purpose, on a day evidently the most convenient to them, it would be very much to be regretted if the investigation of the matter on that day should render the subsequent award of the arbitrators of no avail.... (140) Here, the religious nature of the arbitration proceedings and the fact that it conformed to Jewish observances motivated the court to resist vacating the award. In reaching this conclusion, the court observed: that the parties had consented to the proceedings; that the proceedings were meant to resolve a dispute over religious matters; and that the parties wanted to keep their private religious dispute out of public view. By conceptualizing the case in this way, the court in Isaacs appeared to recognize that some arbitrations are meant to achieve other purposes, and that those purposes suggest the inapplicability of the no-Sunday rule.

   But instead of pursuing and developing this line of reasoning, subsequent New York courts have limited the precedential impact of Isaacs. In Katz v. Uvegi, the court distinguished Isaacs by noting that "the issues submitted for arbitration in the case at bar, did not involve any religious dispute, but was concerned with a dispute over a business transaction." (141) Under this logic, Isaacs would ostensibly apply only where the dispute in question involved wholly religious matters.

   This distinction, however, grossly misunderstands religious arbitration. Parties select religious arbitration in order to have their disputes governed by shared religious principles and values. They do so in order not only to have those values reflected in their chosen method of dispute resolution, but also to conform their commercial dealings to a shared set of religious values. (142) To limit the insight of Isaacs to cases where...