Some may assume that a party that refuses to pay its share of the arbitration fees would lose its case by default. This language allows a non-paying party to put on its defense in the arbitration regardless of whether it pays its share of the arbitration fees.
On the other hand, a non-paying party may be subject to sanctions related to any affirmative claim it asserts in the arbitration. The practical effect of this rule is that the reluctant respondent in an arbitration can avoid paying its fees pretty much with impunity. The cynical among us may believe that a respondent who refuses to pay arbitration fees subjects itself to some form of unwritten stigma in the eyes of the arbitrator. However, my experience has been quite the opposite. Most arbitrators go about their duties with self-conscious professionalism, and are unlikely to allow such issues to affect their legal judgment— as unfair as that may seem given that one party has not paid the arbitration fees.
As noted above, the paying party also has the option of allowing the arbitrator to dismiss the arbitration, and proceeding to litigation. This option also gives rise to a host of additional strategy decisions.
Where an arbitration is terminated due to non-payment of fees, the parties should consider the legal effect of this termination. Worse still, an appellate court found that the termination by the arbitrator essentially constituted the law of the case, foreclosing the petitioner from prevailing in a future proceeding. Christopher Cal. To avoid the potential for such an outcome, a party to a terminated arbitration should request an order from the arbitrator spelling out in detail the grounds of the termination and the effect such termination should have on later proceedings.
Parties to a terminated arbitration may also consider whether the statute of limitations to bring an action in court was equitably tolled for the duration of the arbitration. See, Marcario v. County of Orange Cal. To avoid statute of limitation issues, the parties should consider filing a court action and stipulating to stay the court proceeding pending resolution of the case through arbitration.
Parties to an arbitration must keep in mind the financial requirements of arbitration, not only for budgeting purposes, but for purposes of strategy. By not paying the arbitration fees, respondents can essentially force the petitioner into the choice of paying arbitration fees for both sides or having the arbitration terminated.
This prospect of a party bearing all costs for both sides is exacerbated where the arbitrator is forced to rule upon extensive discovery motions and other motion practice. In sum, the financial element in arbitration has a profound impact on the process. This is not to say that arbitration is worse or better than litigation: it is just a different game with its own set of rules, strategies, and costs.
Arbitration generally allows for less discovery and a faster, and more reliable trial date. These factors may offset the additional costs of paying the arbitrator and arbitration administrator. Sections 11 through 18 of the Uniform Act discuss jurisdiction, venue, and enforcement of the arbitration. Under Section 9 of the Federal Act, if the parties to an arbitration agreement concur that the judgment of a court will be entered on the arbitration award, and if they specify the court in which that judgment will be entered, then within one year after the award is made any party to the arbitration may apply to the designated court for an order confirming the award.
Upon such application, the court must grant the order unless grounds exist to vacate, modify or correct the award. An action under the Federal Act also may be brought in state court.
Therefore, the parties may agree under the Federal Act to confirm the award in either a state court or a federal court provided the selected court has jurisdiction. Under the Federal Act, if the parties specify that the award will be enforced in court but fail to identify the particular court in which enforcement will occur, application for enforcement may be made to the federal court for the district in which the award "was made.
Instead, the courts, in decisions where an award "was made," will consider not only where the award was actually written or posted, but which locale has had the most significant contacts with the contract to arbitrate, the issues in dispute, and the resolution of those issues, and will also evaluate which jurisdiction has had the greatest involvement with the parties and the action. In 16 and 17, the Uniform Act provides that an application for confirmation and enforcement may be made in any court of competent jurisdiction within the state.
According to "The making of an agreement. Section 18 of the Uniform Act provides that applications for enforcement of arbitration awards may be made to a court of the county in which the arbitration hearing was held. If the hearing is held in another state, the application is made to a court where the adverse party resides or has a place of business. If neither of those provisions applies, the application may be made to the court of any county within the state.
The Federal Act is likely to apply to the overwhelming majority of modern-day arbitrations An action under the Federal Act may also be brought in state court. The proper method for seeking to enforce an arbitration award under the Federal Act is to file a motion for confirmation in the appropriate court. That court must grant the motion and enter judgment on the confirmation order unless the opposing party files a timely motion to vacate, modify, or correct the award.
Section 13 of the Federal Act designates the papers that a party moving for an order to confirm an award must file with the clerk when seeking to have judgment entered on the order. The Uniform Act, like the Federal Act, specifies that upon submission of an award to a court, the court shall confirm the award and enter judgment on the award, absent a timely motion to vacate, modify or correct the award. Since the Uniform Act itself provides that arbitration agreements made in the particular state are enforceable in that state's courts, it does not require that the parties include such a provision in their agreement.
However, because of the wide scope of the Federal Act and the possibility that interstate commerce may be involved in some aspect of the agreement between the parties, it would be prudent for all arbitration agreements or clauses even those which do not appear to involve interstate commerce to include language stating that the award is intended to be "final and binding and enforceable in any court of competent jurisdiction".
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