News -- National

RUAA and UMA Legislation from Coast to Coast

August 31, 2005 --States from New Jersey to Alaska interested in modernizing arbitration law have taken a considered look at the Revised Uniform Arbitration Act (RUAA) in the years since 2000, when it was passed by the National Conference of Commissioners on Uniform State Laws (NCCUSL). So far, 12 states have adopted it; another 9 have introduced it in their legislatures.

The original Uniform Arbitration Act, adopted in 1955, provided the basic framework for arbitration law in 49 jurisdictions. Its main goal was to ensure enforceability of agreements to arbitrate future disputes at a time when state law was often hostile to such agreements. Since 1955, however, rapid technological advancement and the emergence of a global marketplace have caused profound changes, including tremendous caseload growth and increased case complexity, that affected arbitration.

In 1995, the NCCUSL appointed a drafting committee to revise the act. With input from the American Arbitration Association, the American Bar Association, the National Academy of Arbitrators, and various sectors that utilize arbitration, the resulting revision received broad support.

The RUAA is meant to modernize, revise, and explain arbitration law. Some of the fundamental changes made by the RUAA deal with addressing the emergence of electronic technology. It clarifies, for example, that "written" arbitration agreements include those made in electronic or other medium that are retrievable in a tangible form and allows arbitrators to decide cases based on documentation that includes electronic information. It also allows the use of videotape, audio presentations, teleconferencing, or other means of modern communication to present witness testimony.

The RUAA also gives arbitrators new powers to issue subpoenas for witnesses and records and to issue interim awards and punitive damages. It authorizes courts to consolidate proceedings and establishes new grounds for vacating awards. In addition, it offers common law immunity for the arbitrator and for a neutral institution administering arbitration.

In the five years since the RUAA was approved, the following states have either adopted the act or introduced legislation to adopt it.

State Adoptions

• Alaska. Governor Frank Murkowski signed legislation adopting the RUAA on July 28, 2004, making Alaska the tenth state to adopt the act. Alaska's version differs from the model statute in three ways--it invalidates arbitration agreements incorporated into contracts that were entered into based on fraud; it exempts arbitration agreements in collective bargaining agreements; and it exempts arbitration agreements contained in labor-management contracts.
• Colorado. Colorado repealed its old Uniform Arbitration Act and enacted the RUAA with amendments on June 4, 2004. This state's version prohibits parties to an arbitration agreement from waiving certain provisions or agreeing to an unreasonable restriction of certain rights, and it specifies the procedures governing application for judicial relief. Colorado is the ninth state to pass the RUAA.
• Hawaii. On June 22, 2001, then-Governor Benjamin J. Cayetano signed into law a bill implementing the RUAA with no changes, making Hawaii the third state to pass the act. Francis J. Pavetti, chair of the RUAA drafting committee, praised Hawaii's decision to adopt the act in its entirety, saying it would greatly help the law's overall effectiveness.
• Nevada. The second state to adopt the RUAA was Nevada. Its version, signed into law by Governor Kenny Guinn on May 31, 2001, excludes the model statute's provision empowering arbitrators to award punitive damages. The insurance industry in the state had opposed the provision, arguing that it gave arbitrators too much power. Despite this change, a member of the RUAA drafting committee commended Nevada's adoption of the act, saying that removal of the provision on punitive damages did not hurt the uniformity of the law.
• New Jersey. This state's version of the RUAA specifically exempts arbitrations arising out of collective bargaining relationships. The amendment was added after former Governor James E. McGreevey conditionally vetoed the legislation because of concerns over provisions pertaining to discovery, punitive damages, and attorneys' fees that he believed might have the unintended effect of being applied in labor arbitration. McGreevey signed the amended bill into law on June 23, 2003, making New Jersey the sixth state to do so.
• New Mexico. The first state to adopt the RUAA was New Mexico. Its version of the act, signed into law on April 3, 2001, by then-Governor Gary E. Johnson, contains a provision added by state legislators barring language in an arbitration clause that denies parties' procedural rights. This amendment was added because of concerns that adhesion-contract language in arbitration clauses used in consumer contracts forces parties with lesser bargaining power to give up their rights.
• North Carolina. Governor Michael Easley signed a bill adopting the RUAA on July 27, 2003. North Carolina was the eighth state to do so.
• North Dakota. The fifth state to adopt the act, North Dakota passed a bill substantially similar to the model statute on April 8, 2003.
• Oklahoma. The most recent state to adopt the RUAA is Oklahoma. The state's governor, Brad Harris, on June 6 signed into law a bill that is largely similar to the model act but includes a "consumer-friendly" amendment designed to satisfy those concerned with the fairness of arbitration agreements in standard contracts that provides a way out for parties with unequal bargaining power.
• Oregon. Governor Theodore R. Kulongoski made Oregon the seventh state to pass the RUAA by signing into law a modified version on July 21, 2003. Oregon's law authorizes the courts to rule on all issues presented in a petition to compel arbitration unless there is a constitutional right to a jury trial on the issue. Kulongoski had raised concerns that this provision could be misinterpreted to allow a party to demand a jury trial on the merits of a dispute and avoid arbitration. Nevertheless, he signed the bill and expressed confidence that the courts are "likely to interpret the act in a way that is consistent with its purpose."
• Utah. Utah, the fourth state to adopt the RUAA, did so on March 26, 2002. The law took effect on May 15, 2003.
• Washington. Washington became the eleventh state to adopt the RUAA when its governor, Christine Gregoire, signed it into law this past May 13. Although it closely tracks the model statute, the Washington legislation specifically exempts labor contracts and cases governed by the state's mandatory arbitration law--civil cases involving monetary claims up to $35,000--from its provisions.

2005 Introductions

• Arizona. The state Senate Judiciary Committee unanimously approved SB 1343 in February. The proposed bill includes language meant to prevent arbitrators from awarding punitive damages, a change favored by the state's insurance industry.
• Maryland. The proposed bill (HB 1393) to enact the RUAA was given an unfavorable report by the House Judiciary Committee in March, effectively eliminating any chance of the bill's passage this year. Business groups opposed the bill because of a provision authorizing arbitrators to consolidate arbitration claims, which might lead to class actions in arbitration. Consumer groups and the Attorney General's Consumer Division were concerned that the bill might expand mandatory arbitration clauses in consumer contracts.
• Vermont. Lawmakers introduced HB 32 in January to adopt the RUAA. The proposed bill, currently in the House Judiciary Committee, closely resembles the model statute.

In addition, the following jurisdictions have proposed legislation adopting the RUAA: Connecticut, Indiana, Iowa, Massachusetts, West Virginia, and District of Columbia.

The National Conference of Commissioners on Uniform State Laws approved the Uniform Mediation Act in August 2001 to replace a patchwork of state laws on mediation. "There has been enormous growth in mediation of private and business disputes," said John M. McCabe, NCCUSL legislative director, at the time. "Though there are literally thousands of statutes governing the rules of mediation, few of them are comprehensive. The Uniform Mediation Act provides clear guidelines on the very important issues of confidentiality and privileges."

The UMA establishes a privilege of confidentiality for mediators and mediation participants that prohibits communications made during mediation from being used in later legal proceedings. The exceptions to the privilege include instances when threats are made to inflict bodily harm, when parties attempt to use mediation to plan or commit a crime, and when the communication is needed to prove or disprove allegations of child abuse or neglect. The act also promotes the integrity of mediation by requiring disclosure of known conflicts of interest as well as the mediator's qualifications.

The UMA does not apply to collective bargaining disputes, some judicial settlement conferences, or mediation involving minor parties. It was approved by the American Bar Association and endorsed by the AAA, JAMS, and the CPR Institute for Dispute Resolution.

In August 2003, a supplement that expands the UMA's coverage to international commercial cases was also approved by the NCCUSL. The supplement, meant to encourage parties to conduct mediations, incorporates by reference the United Nations Model Law on International Commercial Conciliation and gives parties in mediation the choice to use confidentiality protections of either statute.

The UMA provides a privilege to refuse to disclose communications in future proceedings while the U.N. model law excludes mediation statements and documents from use in future legal proceedings. The former protects all mediator statements while the latter protects only mediator proposals. The supplement directs courts to protect "mediator statements that were not proposals so that the protections of the Uniform Mediation Act are given full force."

State Adoptions

• Illinois. Illinois enacted the UMA on July 31, 2003, as the second state to adopt the act. The Illinois version includes an optional provision, offered on an ad hoc basis that doesn't affect the act's uniformity, that requires a mediator to be impartial in conducting the mediation process unless the parties agree otherwise after a mediator makes required disclosures.
• Iowa. After unanimous approval in both chambers of the legislature earlier in 2005, Governor Tom Vilsack signed the UMA into law on April 28, making Iowa the sixth state to do so. Iowa's legislation gives mediators immunity from civil action and expands the state's confidentiality laws to encompass written as well as oral communications and includes non-party mediation participants in the privilege.
• Nebraska. Nebraska was the first state to adopt the UMA. On May 13, 2003, then-Governor Mike Johanns signed into law a slightly modified version of the act that broadens the original's provision authorizing a party to bring a lawyer or other representative during mediation. The Nebraska law also has an optional provision establishing that a mediator must be impartial.
• New Jersey. Acting Governor Richard J. Codey signed a bill enacting the UMA on November 22, 2004, making that state the third to do so. Michael Getty, chair of the UMA drafting committee, praised New Jersey's legislature for approving a bill that closely resembles the model statute.
• Ohio. Governor Robert Taft signed the UMA into law on January 28, 2005, with a provision delaying its implementation for six months to give time for training and education on the new law's requirements. Under Ohio's version, a non-party may pierce the confidentiality of a previous mediation if a court or arbitrator, after conducting an in- camera hearing, determines that the information is not otherwise available and the disclosure is necessary to prevent a manifest injustice. Ohio's version also addresses concerns regarding the right of parties to bring legal representatives to mediations established by the UMA by authorizing mediators to withdraw at any time if they become uncomfortable with the participation of legal representatives at a mediation. The Buckeye State is the fourth state to implement the UMA.
• Washington. When Governor Christine Gregoire signed the legislation on April 22, Washington became the fifth state to adopt the UMA. Although it closely tracks the model statute, Washington's version exempts from the confidentiality privilege mediation materials from state open records laws and certain divorce settlement modifications in order to conform the act to state law.

2005 Introductions

The following jurisdictions have introduced legislation to adopt the UMA this year: Connecticut, District of Columbia, Indiana, Massachusetts, Minnesota, and Vermont. Connecticut, Minnesota, and the District of Columbia incorporated the U.N. Model Law on International Commercial Conciliation into their proposed bills.