The revised Florida Arbitration Code.

Author:Lewis, Craig R.
 
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The Uniform Law Commission met in St. Augustine, Florida, in July 2000 and approved for enactment in all states the Revised Uniform Arbitration Act. (1) The revision was widely supported, receiving endorsements by arbitration groups, such as JAMS and the American Arbitration Association (AAA); by advocates in the consumer, construction, securities, and labor sectors; and by the Torts and Insurance Practice Sections of the American Bar Association, to name a few. (2) Almost exactly 13 years later, in June 2013, Florida joined 17 other states and the District of Columbia in adopting the revision by virtue of Gov. Scott signing the Committee Substitute for S.B. 530 into law, (3) creating the Revised Florida Arbitration Code, F.S. Ch. 682. This revised code was intended to foster greater understanding of the arbitration process and promote various requirements of due process. (4)

The revised code addresses several issues that have been the subject of substantial litigation in state and federal courts since the prior code's enactment in Florida in 1957. These issues include who decides arbitrability of a dispute, the availability of provisional remedies prior to and during the course of an arbitration proceeding, a court of law's power to enforce pre-award rulings by the arbitrator, the arbitrator's immunity, and various procedural aspects of the arbitration. The general goal of the revisions is to better achieve the prior act's purpose of giving effect to parties' agreements to arbitrate, considering the increase in use of arbitration as a mode of alternative dispute resolution and the resulting increase in complexity of the disputes being arbitrated.

Pursuant to F.S. [section]682.013, the revised code automatically applies to all arbitration agreements entered into after July 1, 2013. The parties to an agreement entered prior to that date may agree in a record to apply the revised code to their agreement. (5) As of July 1, 2016, the revised code applies to all arbitration agreements, regardless of when made. (6) Therefore, the revisions should be of interest to professionals from industries in which arbitration provisions are common throughout Florida, including construction and development, consumer, insurance, labor and employment, and securities, and to commercial litigators, contract drafters, arbitrators, and judges. This article discusses some of the more important revisions and compares the revised code to the Federal Arbitration Act (FAA), 9 U.S.C. [section][section]1-16, in light of state and federal decisions coming after the revisions were initially recommended.

The revised code and the FAA can be roughly divided into three sections. The first section deals with general and pre-arbitration matters (e.g., the scope of the law and the validity of agreements to arbitrate governed by it). The second section deals with the conduct of the arbitrator and the arbitration proceeding itself (e.g., the ability of the court and the arbitrator to grant provisional remedies, such as injunctions preserving the status quo immediately prior to or during the arbitration proceeding, the remedies an arbitrator may award, including punitive damages and attorneys' fees, the rules governing the arbitration proceeding, the judicial enforceability of pre-award decisions of the arbitrator, and the immunity of the arbitrator). The third section deals with postarbitration matters (e.g., the procedure and standard for confirmation, modification, and vacatur of the arbitration award).

This article will be so divided, and the revised code and the FAA is discussed under that rubric. First, however, a brief discussion of federal preemption of state arbitration laws is in order.

FAA Preemption of the Revised Code

The FAA provides that all agreements to arbitrate are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (7) This provision has been held to preempt all state law contrary to the purpose of the FAA. (8) Therefore, to the extent a contract involves interstate commerce, which virtually all contracts arguably do, especially after the U.S. Supreme Court's decision upholding "Obamacare" in National Federation of Independent Business v. Sebelius, 567 U.S. __, 132 S. Ct. 2566 (2012), the FAA will govern the enforceability of that contract's arbitration provision, (9) and state laws that disfavor agreements to arbitrate will be preempted. One recent example of this concept is the U.S. Supreme Court's decision in AT&T Mobility, LLC v. Concepcion, 563 U.S. __, 131 S. Ct. 1740 (2011), invalidating as contrary to the FAA a state law providing that class action waivers in arbitration agreements were unconscionable. (10) Because the state law pertained only to arbitration agreements, it was preempted by the FAA and the arbitration provision and class action waiver were enforceable despite the state law. Had the state law treated all class action waivers alike-those contained in arbitration agreements and those contained in other contracts-it may not have been preempted.

The only major limitation on the preemptive effect of the FAA on state law governing agreements to arbitrate appears to be the ability of the parties to contractually opt out of the FAA under Volt Information Sciences, Inc. v. Stanford University, 489 U.S. 468 (1989), by inserting a contractual provision expressing their intent that the arbitration agreement be governed by state law rather than the FAA. (11)

The U.S. Supreme Court's discussion of FAA preemption of state law has for the most part centered around the enforceability of arbitration provisions (a pre-arbitration matter). The FAA itself recognizes that an arbitration provision's enforceability is decided based on the state law generally applicable to contracts (e.g., the doctrines of unconscionability, fraud in the inducement, etc.). However, in the eyes of the drafters of the revised code, the FAA's strong policy favoring arbitration supports the proposition that the FAA preempts all state laws contrary to it, including laws governing post-arbitration matters, such as confirmation, modification, and vacatur, that are broader than those set forth in the FAA. (12)

The drafters, therefore, wrote the revised code with the belief that crafting provisions directly contrary to the FAA would be a pointless endeavor. This belief served as a major motivating factor for the drafters excluding from the final product several proposed revisions.

Provisions Governing Pre-Arbitration Considerations and General Matters

Perhaps one of the most hotly con tested issues after the FAA and the prior arbitration code were adopted was whether the court or the arbitrator determines the arbitrability of a particular dispute. The prior version of F.S. [section]682.03 did not address that issue. Until recently, Florida courts had for the most part held that under the prior arbitration code, the court should decide both the issue of whether an enforceable contract existed and the issue of whether that contract contained an enforceable arbitration provision prior to compelling arbitration, as stated in Cardegna v. Buckeye Check Cashing, Inc., 894 So. 2d 860 (Fla. 2005). (13)

Section 682.02 of the revised code now differentiates between the issue of the enforceability of the contract as a whole and the issue of the enforceability of the contract's arbitration provision. The revised code provides that the issue of the enforceability of the contract as a whole (e.g., unconscionability, fraud in the inducement, and other defenses that if found would mean that the parties had no contract at all) is a matter for the arbitrator to decide during the arbitration proceeding. The issue of the enforceability of the arbitration provision itself (e.g., whether a particular type of dispute is arbitrable under the law and other defenses that would mean the parties may have had a contract, but that their dispute was not subject to arbitration) is a matter for the court to decide when determining whether to compel arbitration. This revision aligns state arbitration law with the FAA as discussed in Buckeye Check Cashing Inc. v. Cardegna, 546 U.S. 440 (2006), in which the U.S. Supreme Court reversed the Florida Supreme Court and held that challenges to the arbitration provision are for the court, but challenges to the entire contract are for the arbitrator. Florida courts have tended to resist the consequences of this holding. (14) Section 682.02 of the revised code basically adopts the U.S. Supreme Court's Buckeye decision as state law. (15) Both the revised code and Buckeye leave open the possibility for the court to determine whether a party actually signed the contract before compelling arbitration. (16)

It should be noted that under [section]682.14 of the revised code, the provision of [section]682.02 calling for the court to determine the enforceability of the arbitration provision can be waived. The incorporation of AAA or JAMS rules in an arbitration agreement has been interpreted to constitute such a waiver because those rules grant the arbitrator the authority to decide the enforceability of a contract's arbitration provision, as well as the enforceability of the contract as a whole. (17) Such a waiver right is generally consis tent with the parties' ability to contract for arbitration as they see fit, within reason. Therefore, if the arbitration agreement incorporates either AAA (18) or JAMS (19) rules, the arbitrator and not the court will decide the enforceability of both the entire contract and the arbitration provision itself.

In addition to bringing state law on the enforceability of...

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