Arbitration

UNCITRAL Model Police

Is the arbitration law based on the UNCITRAL Model Law?

No. As more fully discussed beneath, a distinction needs to be made in the procedural police applicable to arbitration and the substantive law governing a merits that is in arbitration.

At the threshold, the applicable procedural law governs such matters every bit the enforcement of mediation provisions found in the contract or understanding between the parties, and also the enforcement of awards rendered after mediation. In this regard, there are 3 primary sources for this procedural constabulary in connectedness with arbitration proceedings taking place in California or governed by its law. First, in that location is a federal statute, the Federal Arbitration Human action, nine USC section one et seq, which in some cases will pre-empt contrary state procedural rules. 2nd, in that location is the California Mediation Human action, which is establish at CCP sections 1280 et seq. Third, the arbitral organisation itself may have rules governing the date of arbitrators, the comport of the hearing and similar issues.

As singled-out from these procedural rules, the substantive law to be applied in an mediation proceeding may exist California law, federal constabulary, the law of a strange nation or some other grade of noun police force. As arbitration is ordinarily a matter of contract, information technology is typical that the parties' contract will specify the substantive law to be applied. In the absence of such an express election, the arbitrator may be obliged to apply conflicts of law principles to determine the substantive law to be practical.

Arbitration agreements

What are the formal requirements for an enforceable mediation agreement?

An agreement to arbitrate a dispute is typically embodied in a provision in a written contract betwixt the parties. Run into CCP section 1281.

In this regard, the Usa Supreme Court decision in AT&T Mobility five Conception, 563 The states 321, 131 S Ct 1740 (2011) held that the Federal Arbitration Act (the FAA) pre-empts state laws that prohibit outright the arbitration of particular types of claims. Recent California appellate decisions have practical the Court'due south ruling in Conception to enforce agreements to intervene (Iskanian v CLS Transportation Los Angeles, LLC, 59 Cal 4th 348 (2014) (FAA pre-empts prohibition of class action waivers in employment cases)). However, McGill v Citibank, NA, 2 Cal 5th 945 (2017), declared pre-dispute mediation provisions that waive the correct to seek public injunctive relief − namely injunctive relief that has the primary purpose and effect of prohibiting unlawful acts that threaten future injury to the general public – to exist unenforceable.

There is also an of import conclusion from 2020. In Victrola 89, LLC v Jaman Properties 8, LLC, B295439 (Cal Ct App 2020), the court made clear that parties can provide that their agreement to intervene will be subject to the Federal Arbitration Deed (FAA) in lieu of state court procedural rules. In that instance, the pertinent understanding provided that 'enforcement of this understanding to arbitrate shall be governed by the Federal Mediation Deed'. In these circumstances, the court concluded that the moving party'southward motion to compel arbitration would be governed by the FAA instead of country procedural rules.

This determination is important because it sanctions the employ of the arbitration-friendly FAA rules in lieu of land procedural rules where the parties expressly provide for that. In view of the perceived hostility on the part of California appellate courts toward the enforcement of pre-dispute mediation provisions, this decision provides a basis for increasing the likelihood that such provisions will in fact be enforced.

The appellate courts in California are too coming to grips with the enforceability of browserwrap agreements. These agreements are typically found on websites in the form of 'terms and conditions' for website use. In one recent case, the court declined to compel a claimant to pursue his claim via arbitration where the arbitration provision was contained in such a browserwrap agreement. The courtroom held that the website at issue failed to put a reasonably prudent user on inquiry notice of the terms of the supposed contract. For this reason, the court declined to compel arbitration of the claim. Long v Provide Commerce, 245 Cal App 4th 855 (2016). See besides Norcia v Samsung Telecommunications, 845 F3d 1279 (9th Cir 2017) (consumer not bound by arbitration provision independent in warranty sheet accompanying product).

Another issue that the appellate courts in California have dealt with is whether not-signatories to an understanding containing an mediation provision are bound past, or can themselves enforce, the agreement to arbitrate. The primal cases in this surface area included Garcia 5 Pexco, LLC, 11 Cal App fifth 782 (2017) (agent may bind principal to terms of mediation agreement); Hutcheson v Eskaton Fountainwood Lodge, 17 Cal App. 5th 937 (2017) (relative holding healthcare power of attorney not authorised to demark principal to arbitration agreement); and Jensen 5 U-Haul Co. of California, 18 Cal App fifth 295 (2017) (employee was not third-party beneficiary of rental contract and therefore arbitration provision contained therein could not be enforced). See also Vasquez five San Miguel Produce, 31 Cal App 5th 810 (2019), rehearing granted (28 February 2019) (an bureau or similar human relationship betwixt a signatory and 1 of the parties to an arbitration agreement allows enforcement of the understanding past the non-signatory).

Finally, there have been two highly significant legislative developments in California affecting mediation.

Assembly Bill 51, signed by California Governor Gavin Newsom in October 2019, prohibits employers from requiring mandatory mediation agreements from employees. Although enforcement of this new law has been temporarily stayed, its enactment underscores the Californian government's hostility to mandatory arbitration, especially in employment and consumer-related disputes.

Senate Pecker 707, too signed by Governor Newsom last year, provides that in the context of employment disputes that are governed by mediation, employees cannot exist required to deport any type of legal costs or expenses incident to the mediation process. This new law also provides that an employer'due south failure to pay those arbitration costs or expenses will constitute a material alienation of the arbitration agreement.

Choice of arbitrator

If the arbitration agreement and whatever relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

If the parties' understanding is silent on this point, then the selection and number of arbitrators is ordinarily determined by reference to the arbitral organisation's procedural rules on that subject. In the absenteeism of such rules, CCP section 1282(a) provides for the appointment of a single neutral arbitrator.

Equally to the parties' right to challenge the appointment of a particular arbitrator, the arbitral organization's procedural rules will likewise typically accost both removal for crusade and the correct of either party to exercise a peremptory challenge. In the absence of such rules, CCP section 1281.91 sets forth the grounds for the disqualification of an arbitrator.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

Selection of arbitrators can be governed in a particular case past at least two sets of rules.

Kickoff, the controlling mediation clause may itself (and typically does) specify how many arbitrators are to be selected and the manner of their selection. In add-on, the rules of the particular arbitral organisation (eg, JAMS, International Bedroom of Commerce (ICC)) that the parties have selected may outline the way in which arbitrators shall be selected.

In terms of the puddle of candidates, there are some arbitral organisations that are focused on, or specialise in, the resolution of disputes in sure noun areas of the law. For example, the ICC and the International Dispute Resolution division of the American Arbitration Association (AAA) specialise in international or cross-border disputes, and the arbitrators from these organisations more often than not come up from a pool of practitioners, and in some cases former judges, with experience in that specific surface area.

Outside the international surface area, the private ADR organisations that have a big presence in California (AAA, ADR Services, JAMS) have a diversity of individual neutrals, with each having a item focus or emphasis on his or her area of exercise. There is thus visibility and transparency to private lawyers and their clients concerning who within these ADR organisations would be the 'correct fit' in particular cases.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Equally noted above, both the FAA and the California Arbitration Act address such matters every bit the enforcement of arbitration provisions constitute in the contract or agreement between the parties, and also the enforcement of awards rendered after arbitration. As the procedural outcomes under these two statutes may be quite dissimilar, practitioners should exercise intendance in drafting the language in the underlying agreement that contains the arbitration provision.

In this regard, at that place proceed to be unresolved conflicts betwixt state and federal courts concerning issues such as whether state or federal procedures govern the enforcement of arbitration agreements in State Courtroom (Los Angeles Unified School District v Safe National Casualty Corporation, xiii Ca App 5th 471 (2017)) and whether state substantive law that disadvantages arbitration is trumped past the FAA (Kindred Nursing Centers Limited Partnership 5 Clark, 197 L Ed 2nd 806 (2017)).

Importantly, California does not recognise or enforce pre-dispute jury trial waivers. Indeed, in a case in October 2019, the California Court of Appeal declined to enforce choice of law and option of forum provisions in a commercial contract on the footing that such enforcement would lead to the forfeiture of a California resident'due south right to a jury in connexion with a ceremonious dispute Handoush v Lease Finance Grouping, LLC, 41 Cal App 5th 729 (2019). The case highlights the sanctity of the right to jury trial, which is safeguarded in both the Us and California state constitutions.

Court intervention

On what grounds can the courtroom intervene during an arbitration?

Normally, once a matter has been sent to mediation the role of the court is usually limited to proceedings to confirm or vacate an arbitration accolade. Resort to court process is immune where a political party to an arbitration seeks interim remedies, such as injunctive relief.

Acting relief

Do arbitrators accept powers to grant acting relief?

Depending on the rules of the arbitral organisation, interim relief can be granted in arbitration. Interim relief tin be requested from an emergency arbitrator (providing the arbitral organisation allows for such), the arbitral panel itself or the national courts of the country where the mediation is held.

The cardinal determinant every bit to the availability of such relief is the language of the arbitration agreement itself, namely, whether information technology confers power on the tribunal to grant acting measures.

In the absence of such a provision, the CCP contains a carve-out that allows a party to an arbitration proceeding to seek conditional relief in the Superior Court, including the proviso that an application in court for such provisional relief does non waive the applicant's correct of arbitration. (See CCP sections 1281.viii(b) and (d).)

Laurels

When and in what form must the accolade be delivered?

The rules of the arbitral organisation usually specify both the grade and the timing of the arbitral honour.

In the absence of such rules, CCP section 1283.4 provides that the accolade must be in writing and include a determination of all the questions submitted to the arbitrators for determination of the controversy. In addition, CCP section 1283.3 provides that the award shall be made within the fourth dimension fixed in the parties' agreement or, if not so fixed, within such time as the court orders on petition of a political party to the arbitration.

Entreatment

On what grounds can an award be appealed to the courtroom?

Appellate review of an arbitration award is extremely limited. In the first instance, an arbitration award must be 'confirmed' by the superior court. This means that post-obit the conclusion of the arbitration proceeding, the prevailing party must petition the superior court to 'confirm' the mediation honor, that is, enter it in the form of an enforceable judgment (see CCP department 1285).

In the overwhelming number of instances, the superior court will 'confirm' the arbitration award and enter it equally an enforceable judgment. This is considering the grounds for vacating (or failing to 'confirm') the honor are extremely limited. See CCP department 1286.2. Thus, an arbitration accolade will not be vacated even where an arbitrator fabricated errors of fact or errors of law. Run across Moncharsh 5 Heily & Blase (3 Cal fourth 1 (1992)). Put but, the superior court does not engage in an evaluation of the merits of the controversy when making its determination to ostend an arbitration award. Merely see Aspic Applied science and Construction v EEC Centcom Constructors, 913 F3d 1162 (9th Cir 2019) (where arbitrator'southward award fails to draw its essence from the parties' underlying agreement, vacation of award is proper).

Past contrast where an mediation agreement provides that the arbitrator's decision may be reviewed by the Superior Court for errors of fact or law, the scope of review will be broader than as otherwise provided under CCP 1286.ii. See Harshad & Nasir Corporation v Global Sign Systems, Inc, 14 Cal App fifth 523 (2017).

Every bit to whether an order granting or denying a petition to hogtie arbitration is appealable, the general rule in both state and federal courts is that an order compelling arbitration is not appealable (Johnson 5 Consumerinfo.com, Inc, 745 F3d 1019 (9th Cir 2014); Bertero v Superior Courtroom, 216 Cal App 2nd 213 (1963)), while at least in state court an order denying a petition to compel mediation is appealable (Smith five Superior Courtroom, 202 Cal App 2nd 128 (1962)). In a state court, an entreatment from an order denying a petition to hogtie mediation volition also operate to stay the trial court proceedings as to the party who brought the petition without the appellant having to mail a bond.

The role of an appellate court is even more limited. One time an mediation honour is confirmed by the superior court, the appellate court's role is express to determining whether such confirmation was advisable. As with the trial courtroom's own confirmation process, the appellate court does non appoint in an evaluation of the claim of the controversy when it is asked to review the appropriateness of the trial courtroom's action in confirming or vacating the award.

Enforcement

What procedures be for enforcement of foreign and domestic awards?

One time the hearing has been completed, the mediation culminates in the arbitrator'due south issuance of an award in favour of one of the contracting parties.

If the loser pays the award, no farther proceedings will presumably be necessary. Nonetheless, in the upshot that the winner needs to enforce the award, it will have to file a court activeness to ostend the award, that is, convert information technology into an enforceable judgment. If the arbitration provision is governed by the Federal Arbitration Act, that provision should expressly provide that parties agree that any arbitration award shall be judicially confirmed.

At this stage of the proceedings, the loser has few options. The grounds for challenging or setting bated an mediation award are limited and extremely narrow. A court that is asked to confirm the award volition non normally review the merits or overturn the accolade, even where there take been errors of law or fact.

Nor tin can the merits of the arbitration honor be appealed, except where the arbitration understanding provides that the arbitrator'south decision tin can be reviewed for errors of fact or constabulary (Harshad & Nasir, supra, 4 Cal App fifth 523). Thus, ordinarily, once a judgment on the award has been entered, whatsoever appeal therefrom will normally exist limited to the appropriateness of confirmation, not the underlying claim of the dispute itself.

The contempo alter in the political mural in the United states of america has not affected the enforcement procedures for strange or domestic awards. Inasmuch as at that place is a separation of powers between the executive and judicial branches of government, the enforcement of foreign and domestic awards is governed by the pertinent statutes, specially the New York Convention, and the judicial interpretations of those statutes.

Costs

Can a successful party recover its costs?

As a general rule, under CCP department 1284.ii, each political party to the arbitration is required to pay his or her pro rata share of the expenses and fees of the neutral arbitrator unless the parties' understanding otherwise provides.

In that location have been two recent developments concerning the recovery of costs, particularly as they relate to ESI.

CCP section 1033.5 was recently amended to allow for the recovery (as part of the costs awarded to a prevailing party) of fees 'for the hosting of electronic documents if a court requires or orders a party to have documents hosted by an electronic filing service provider'.

In addition, CCP section 1985.viii, which applies to subpoenas seeking ESI, allows the courtroom in particular circumstances to allocate the cost of the retrieval and production of ESI from a tertiary-party custodian of the ESI to the political party who serves the subpoena seeking those records.

There are no California statutes or judicial decisions that allow for the recovery of the costs incident to third-party litigation funding.

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29 Apr 2020