Enforcement of Arbitration Awards in Colorado
| Publication year | 1985 |
| Pages | 535 |
| Citation | Vol. 14 No. 4 Pg. 535 |
1985, April, Pg. 535. Enforcement of Arbitration Awards in Colorado
Alternative dispute resolution is fast becoming a buzzword in the legal community. Chief Justice Burger of the U.S. Supreme Court has expressed his frustration on numerous occasions with the over-burdened court system. He has urged attorneys and persons involved in private disputes to find a way to resolve these disputes outside the confines of the court system, especially when they do not involve complicated legal issues.(fn1) Moreover, in 1977, the American Bar Association established a special committee to study alternative dispute resolution, and a National Institute for Dispute Resolution was formed in 1983 to assist in implementing alternative methods of dispute resolution. The American Trial Lawyers Association has taken a position in support of creative alternative dispute resolution that protects the adversary system.(fn2)
In Colorado, the Colorado Office of Dispute Resolution has been established as part of the Colorado Judicial Department to administer mediation programs through the courts.(fn3) Also, the Colorado legislature has passed the Uniform Arbitration Act of 1975 and the Dispute Resolution Act in 1983.(fn4) Articles concerning alternative dispute resolution have appeared in both national publications and The Colorado Lawyer.(fn5) Finally, both Colorado and U.S. Supreme Court cases, as discussed below, give deference to a decision by parties to settle disputes by arbitration. Despite all of this, many attorneys in Colorado remain skeptical that arbitration or other means of dispute resolution can be used effectively to assist their clients.
Enforceability is a key determinant of whether arbitration is viewed by the public and by practicing attorneys as a viable alternative means of dispute resolution. With this climate of activity, interest and skepticism as a backdrop, this article reviews the law in Colorado regarding the enforcement of arbitration awards.
The President of the American Arbitration Association has observed that there are four principal advantages to resolving disputes through arbitration.(fn6) The first of these is that arbitration generally results in much faster resolution than court litigation. The second major advantage of arbitration lies in its decreased cost. Since arbitration is a much less formal method of dispute resolution, it minimizes the costs associated with preparation of formal legal documents, pleadings, briefs and arguments. In fact, it may allow parties to resolve a dispute completely without the involvement of attorneys. The high cost of legal services continues to be a major source of public frustration with the legal profession and receives a great deal of publicity in national and local media.(fn7)
A third major advantage is that arbitration allows the parties to resolve their dispute privately. The decision to take a dispute to arbitration and the arbitrator's award may remain a personal matter between the parties, since arbitration awards do not necessarily become a matter of public record, as do court decisions. Lastly, parties who agree to resolve their dispute by arbitration select the arbitrator, set the limits of the arbitrator's authority and decide the procedures the arbitrator will follow in reaching a decision.
Despite these advantages, arbitration is not the right forum to resolve complicated legal issues such as civil rights litigation.(fn8) Many arbitrators are not lawyers. Thus, they often feel they are not bound to follow the "law" in resolving disputes. However, arbitrators such as those affiliated with the American Arbitration Association, Federal Mediation and Conciliation Service, Judicial Arbiter Group(fn9) and other professionals(fn10) are skilled in sorting out complicated factual disputes and in reaching a fair and impartial resolution. These factual cases particularly lend themselves to resolution through arbitration.
Arbitration has been used to resolve disputes since the beginning of time. It is likely that forms of arbitration resolved tribal discord. Arbitration also probably settled business squabbles among voyagers, trappers and traders, as well as a multitude of other disputes before a formal court system was developed. As court systems and lawyers became more numerous, the legal system became jealous of its special role in resolving disputes. Early English judges were paid by the parties who appeared before them; they could not afford to lose jurisdiction to arbitration or other forms of dispute resolution. Thus, England began a tradition of judicial refusal to enforce arbitration clauses that was adopted by the American courts.(fn11)
Frustration with judicial reluctance to enforce arbitration agreements and decisions resulted in the passage of the Federal Arbitration Act (originally the United States Arbitration Act) in 1925.(fn12) The Act provides, in part, that a written arbitration provision in a contract involving commerce is valid and enforceable unless the contract is revocable in law or equity.(fn13) After the passage of the Act, a question arose as to whether Congress intended that such clauses would supersede state laws that required that disputes be resolved in state court even where the parties had agreed to resolve their disputes by arbitration. This question was finally answered by the Supreme Court in January 1984.
The case of Southland Corporation v. Keating(fn14) arose when a 7-Eleven franchisor signed contracts with a number of 7-Eleven franchisees, each containing an arbitration clause. The clause required that all disputes arising out of the agreement be resolved by arbitration. However, California law required that breaches of contract and violations of the disclosure requirements of the California Franchise Investment Law be resolved in state court.
Several franchisees sued the franchisor in state court. As an affirmative defense, the franchisor claimed that the case was not ripe for litigation since the franchisees had not complied with the arbitration clause. The California...
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