Disputing Blog by Karl Bayer, Victoria VanBuren, and Holly Hayes
Paul Bennett Marrow, Adjunct Professor at New York Law School, Member of the Commercial Panel for theAmerican Arbitration Association, ADR Systems, Public Member of the FINRA Panel of Neutrals, and Fellow at the Chartered Institute of Arbitrators in London, England, has published “Are Rules Allowing Arbitral Sanctions a Mirage?,” 88 Journal New York State Bar Association 28, June 2016. In his publication, Mr. Morrow discusses whether an arbitrator may use permissive procedures to impose sanctions beyond those currently available by judicial decree.
Here is the abstract:
This article examines the impact permissive procedures have on an arbitrator’s ability to maintain order. The suggestion made is that the new rules offer nothing that isn’t already available by judicial decree. While the effort to assist the arbitrator is laudable, no administrator can go further than the limitations mandated by 9 U.S.C. §§ 1-16, the Federal Arbitration Act (FAA), as interpreted by courts. Anyone who does so faces vacatur and in extreme cases a finding that the action is “misconduct” under FAA § 10(a)(3). Given this structure, both the administrators and arbitrators face a simple choice: (1) Go no further than what courts have already deemed acceptable or (2) undertake to fashion a new untested “sanction” and hope that a court will support the effort. If the first alternative is favored, administrator rules allow what courts have already approved. If the second alternative is favored, administrator rules serve no purpose other than to empower an arbitrator to take a serious risk. If this analysis is correct, then the new rules are a mirage.
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