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Michigan Passes Revised Uniform Arbitration Act

January 2, 2013
Business Law Advisory

Michigan's "bare bones" arbitration laws have been given more definition by legislation passed in the recent lame duck legislative session. The new statute, effective July 1, 2013 deals with virtually the full spectrum of issues in private arbitration, including:

  • agreements to arbitrate;
  • the procedure for invoking and enforcing arbitration obligations;
  • the arbitrator's selection, ethical obligations and authority;
  • the process by which an arbitration award may be confirmed, vacated, modified or corrected; and
  • appeals from court orders compelling/denying arbitration, or confirming, vacating, modifying or correcting arbitration awards. 

Many of the new provisions will seem entirely predictable, but several are worthy of special mention:

  • "Arbitration organization"  is virtually any neutral entity that initiates, sponsors or administers arbitrations or is involved with arbitrator selection.  It also defines
  • A "record," is a prerequisite to the finding of an agreement to arbitrate, and includes a written or electronic records
  • Parties to an arbitration can waive or vary the law, but there is a long list of statutory requirements that may not be waived.
  • The only issues to be decided by a court in an action to compel arbitration are: 1) whether a valid agreement to arbitrate exists between the parties; and 2) whether a particular controversy is subject to that agreement.  All other issues are to be decided by the arbitrator, including most notably, alleged timeliness and other procedural irregularities. 
  • The statute lists provisional (maintenance of the status quo, usually) remedies pending arbitration by indicating such remedies may be the province of the courts before an arbitrator has been selected, but are the province of the arbitrator once selected except in the case where the matter is urgent and the arbitrator is unable to timely or effectively act.
  • There is specific guidance on when multiple claims between the parties may properly be consolidated.
  • Arbitrators are granted the same essential immunity from civil liability enjoyed by Michigan judges and makes arbitrators generally immune to forced testimony, whether by subpoena or otherwise.
  • A party's right to be represented by counsel is in the statute.
  • The subpoena and discovery process is defined. 
  • Time limits for certain arbitration activities are spelled out.
  • The grounds upon which an arbitrator may award punitive damages and reasonable attorney fees to a party are defined.

The new law should not only hopefully provide solid guidance, but also simplify and decrease litigation over enforcement of arbitration agreements and enforceability of arbitration awards.

For those entities who have arbitration requirements in their employee handbooks or company documents, it may make sense to have a brief legal review to see the impact the new law may have on such provision, and whether changes to language would be warranted.

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