REVISED UNIFORM ARBITRATION ACT R EPORT TO THE P ENNSYLVANIA S ENATE J UDICIARY C OMMITTEE R EGARDING H OUSE B ILL 1159, P RINTER ’ S N O . 1261 Raymond P. Pepe, Uniform Law Commission 1 Stephen G. Yusem, Pennsylvania Bar Association 2 April 24, 2012 Introduction House Bill 1159, Printer’s No. 1261 recommends the enactment of the Revised Uniform Arbitration Act (“RUAA”) as drafted and approved by the Uniform Law Commission (“ULC”) and approved by the American Bar Association House of Delegates, the American Arbitration Association, the National Academy of Arbitrators and the National Arbitration Forum. The principal objective of the RUAA is to update and modernize the Uniform Arbitration Act (“UAA”) as promulgated by the ULC in 1955 and adopted in whole or in part by every state except New York. The RUAA adds procedural provisions absent from the UAA, conforms the UAA more closely to the requirements of the Federal Arbitration Act, and includes provisions to facilitate the use of electronic records in arbitration proceedings. The Role of the ULC The ULC, also known as the National Conference of Commissioners on Uniform State Laws (“NCCUSL”), is an unincorporated nonprofit association representing state uniform law commissions created by every state, the District of Columbia, the Virgin Islands and Puerto Rico. The work of the ULC is primarily supported by small dues payments made annually be each state and by donations received by the Uniform Law Foundation. Voting power is exercised on the basis of “one state, one vote.” All Commissioners are members of the Bar and serve without compensation. The work of the ULC is also supported by a small administrative office located in Chicago. 1 Mr. Pepe is a partner in K&L Gates, LLP, 18 th Floor, 17 N. Second Street, Harrisburg, PA 17101-1507, (717) 231-5988, raymond.pepe@KLGates.com. He serves on the ULC as an appointee of the Senate President Pro Tempore. He has been a member of the ULC since 1983 and previously was appointed to the Commission by Governor’s Thornburgh, Casey and Ridge. He is former member of the Executive Committee of the ULC, currently chairs the ULC's Federalism Committee, and serves as the Legislative Liaison Member of Pennsylvania Delegation of the ULC. 2 Mr. Yusem, 600 W. Germantown Pike, Ste 400, Plymouth Meeting, PA 19462, (610) 940-1750, syusem@syusem.com, chairs the Pennsylvania Bar Association’s Alternative Dispute Resolution Committee. A fellow of both the College of Commercial Arbitrators and the Chartered Institute of Arbitrators, he is an adjunct professor of law (dispute resolution) at the Cornell University Law School. He chairs the Commercial Subcommittee of the Pennsylvania Joint State Government Commission Advisory Commission on Alternative Dispute Resolution and is the former chair of the American Bar Association Section of Dispute Resolution Arbitration Committee. 1
The purpose of the ULC is to promote uniformity in state law on all subjects where uniformity is desirable and practical. Organized in 1892, the ULC drafts acts on various subjects and endeavors to secure enactment of proposed acts in every state. Many ULC acts, such as the Uniform Commercial Code, have been universally enacted, or nearly so. Pennsylvania has long played an important role in the work of the ULC and was the first state to adopt the Uniform Commercial Code. Other acts promulgated by the ULC and adopted by Pennsylvania in recent years include the Uniform Athletic Agents Act, the Uniform Child Custody Jurisdiction and Enforcement Act, the Condominium Code, the Uniform Conservation Easements Act, the Uniform Determination of Death Act, the Uniform Electronic Transactions Act, the Uniform Environmental Covenants Act, the Fraudulent Transfers Act , the Transfer on Death Securities Registration Act, the Uniform Trade Secrets Act, and the Trust Code. The members of the Pennsylvania Delegation to the ULC are appointed by the Governor, the President Pro Tempore of the Senate, the Speaker of the House and the Senate and House Minority Leaders. A designee of the Attorney General is also a member of the Pennsylvania Delegation. Representatives of the Legislative Reference Bureau and the Joint State Government Commission also serve as Pennsylvania delegates to the ULC. 3 Drafting, Promulgation and Adoption of the Revised Uniform Arbitration Act The RUAA was developed over a nearly three year period beginning in October 1997 by a Drafting Committee appointed by the ULC assisted by a diverse group of stakeholders and advisors. 4 To assist it in its deliberations, the Drafting Committee invited directly affected stakeholder groups to participate in its meetings as observers and advisors. These observers and advisors included representatives of the American Bar Association (including the ABA’s Dispute Resolution Section, Labor and Employment Section, Litigation Section, Senior Lawyers Section and Trust Estates and Probate Section), the American Arbitration Association, the American Civil Liberties Union, the American College of Real Estate Lawyers, the Center for Public Resources, the International Chamber of Commerce, the Matrimonial Lawyers Association, the National Association of Securities Dealers, and several other organizations. Prior to each Drafting Committee meeting, the text of proposed revisions to the 1955 version of the Uniform Arbitration Act was circulated for review and comment. Each meeting was open to public and was well-attended by the Committee’s observers and advisors. 3 The current members of the Pennsylvania Delegation to the ULC are Christopher D. Carusone (designee of the Governor’s General Counsel); William H. Clark, Jr. (designee of the Joint State Government Commission), Anthony Alliano (appointed by the Speaker of the House); Vincent C. Deliberato, Jr. (designee of the Legislative Reference Bureau); John L. Gedid (appointed by the Senate Minority Leader), Robert T. Mulle (designee of the Attorney General), Raymond P. Pepe (appointed by the President Pro Tempore of the Senate), Curtis R. Reitz (appointed by the Governor), Nora Winkelman (appointed by the Governor), and Michael Schwoyer (appointed by the House Minority Leader). 4 The members of the Drafting Committee were Francis J. Pavetti (Char, Connecticut), Francisco L. Acevedo (Puerto Rico), Richard T. Cassidy (Vermont), M. Michael Cramer (Maryland), Barry C. Hawkings (Connecticut), Timothy J. Heinsz (Reporter, Missouri), Roger C. Henderson (Arizona), Jeremiah H. Marsh (Illinois), Rodney W. Satterwhite (Texas), James A. Wynn, Jr. (North Carolina) and Joan Zendon (District of Columbia). 2
Following the Drafting Committee Meetings, the draft RUAA was presented for section-by- section debate by the full membership of the ULC at its 1999 and 2000 Annual Meetings. On August 3, 2000, following the second-reading of the act, the ULC approved the RUAA by a unanimous vote of the States. The RUAA was formally endorsed by the ABA House of Delegates at the ABA’s 2001 Mid-Year Meeting. Thereafter, the RUAA was endorsed and recommended for adoption by the American Arbitration Association, the National Academy of Arbitrators, the National Arbitration Forum, and the Alternative Disputes Resolution Committee of the Pennsylvania Bar Association. Currently, the RUAA has been enacted in 16 jurisdictions, i.e. , Alaska, Arizona, Arkansas, Colorado, the District of Columbia, Hawaii, Minnesota, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Oregon, Utah and Washington. The RUAA is also currently under consideration in Massachusetts, Michigan and New York. Summary of the RUAA and House Bill 1159 The original UAA was adopted by the ULC in 1955, and closely tracked the provisions of the Federal Arbitration Act (“FAA”) which was enacted by Congress in 1925. Both Acts are essentially “bare bones acts,” and neither Act has ever been amended. Therefore, for all practical purposes, there has not been any revision of American statutory arbitration law for over 85 years. As could be expected, during that period of time a plethora of arbitration case has been developed. The RUAA seeks to incorporate into law the most significant procedural developments which have occurred since adoption of the FAA and the UAA so as to provide greater guidance and assistance to parties engaging in arbitration. The most important changes proposed by the RUAA to the 1955 Act occur in the following areas Notice. Section 7321.3 is a new section not found in the UAA establishing standards for giving and receiving notice regarding actions taken with respect to arbitration agreements and proceedings. Freedom of Contract. Section 7321.5 is a new section not found in the UAA which clearly identifies which provisions of the Act are subject to modification by agreement by parties to an arbitration agreement or proceeding. The objective of this section is to preserve the ability of parties to craft an arbitration agreement best suited to meet their needs and objectives, subject only to a few minimum requirements that may not be modified by agreement. Validity of Arbitration Agreements. Subsections (b), (c) and (d) of section 7321.7 provide new rules not found in the UAA to resolve arbitrabilty disputes. These rules clarify that it is the responsibility of a court to decide whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate, however it is the responsibility of an arbitrator to determine whether a condition precedent to arbitration has been satisfied and whether a contract containing a valid agreement to arbitrate is enforceable. 3
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