Welcoming Reform: An Overview of Tennessee’s Revised Uniform Arbitration Act
Pet owners know from personal experiences that treats are indispensable while training fur babies. A teaspoon of peanut butter goes a long way while instructing them to sit or perform a heartwarming “high five.” Similarly, within the arbitration community across the world, knowledge of the UNCITRAL Model Law (Model Law) is crucial as it forms basis for arbitration legislations in many countries, including the United States.
Based on the Federal Arbitration Act (FAA), the Uniform Law Commission enacted the Uniform Arbitration Act (UAA) in 1955 and subsequently amended it in 1956. Notably, the UAA was adopted by 35 U.S. states and 14 other U.S. jurisdictions modeled legislations like the UAA. The FAA was enacted in 1925, before the Model Law, and neither the FAA nor the UAA was based on the Model Law. However, the increase in using arbitration to resolve disputes in the United States resulted in the enactment of the Revised Uniform Arbitration Act (RUAA) by the Uniform Law Commission in August 2000. Distinguishing itself from the UAA, the RUAA contains several provisions that parallel the Model Law.
In April 2023, Tennessee became the 23rd state to sign the RUAA, replacing the UAA, which will come into effect on July 1, 2023. To better understand the advantages of the Tennessee RUAA (TRUAA), this article summarizes its distinctive features with a primary focus on Tennessee and briefly discusses the cases that gave rise to the amendments in RUAA.
Waiver of Provisions
Unlike the UAA which failed to expressly permit waiver of certain provisions of the legislation, Section 29-5-205, Tennessee’s RUAA (TRUAA) allows parties to either waive or amend provisions of the act but with restrictions and limitations. A summary of the structure provided under the TRUAA is below:
- Provisions that cannot be waived or varied the effect of, prior to the existence of a controversy, that is, in the pre-dispute arbitration agreement: application for judicial relief (§ 29-5-306(a)); validity of agreement to arbitrate (§ 29-5-307(a)); provisional remedies by the court/ arbitrator (§ 29-5-309); power of the arbitrator to issue subpoenas (§ 29-5-318(a)); power of the arbitrator to allow deposition of a witness to be taken for use as evidence at the hearing (§ 29-5-318(b)); jurisdiction of the court (§ 29-5-327); appeals (§ 29-5-329); and right of representation by a lawyer except by a labor organization in a labor arbitration (§ 29-5-317).
- Provisions that cannot be unreasonably restricted before the controversy arises: notice of the initiation of an arbitration proceeding (§ 29-5-310); and disclosure of facts by a neutral arbitrator (§ 29-5-313).
- Provisions that cannot be waived or varied the effect of at any time: prospective applicability of TRUAA (§ 29-5-304(a)); retrospective applicability of TRUAA upon agreement by the parties (§ 29-5-304 (c)); motion to compel or stay arbitration (§ 29-5-308); immunity of arbitrator; competency to testify’ attorney’s fees and costs (§ 29-5-315); judicial enforcement of pre-award ruling by the arbitrator (§ 29-5-319); modification or correction of the award (§ 29-5-321 (d)); effect on modified or corrected award (§ 29-5-321 (e)); confirmation of award (§ 29-5-323); vacatur of award (§ 29-5-324); modification or correction of award by the court (§ 29-5-325); judgment on award (§ 29-5-326(a)); attorney’s fees by the court (§ 29-5-326 (b)); uniformity of application and construction (§ 29-5-330); and electronic signatures (§ 29-5-331).
Power to Order Provisional Remedies
- 29-5-309, TRUAA empowers both judicial courts and the arbitrator to grant provisional remedies to protect the effectiveness of the arbitration proceeding. However, the power of a court to grant such provisional remedies is limited until such time that the arbitrator is appointed and authorized to be able to act. RUAA incorporates language from Merrill Lynch v. Salvano, 999 F.2d 211 (7th Cir. 1993) wherein although the federal court granted a temporary restraining order, its validity was conditioned upon the assembly of the arbitration panel. The court held that, “once assembled, an arbitration panel can enter whatever temporary injunctive relief it deems necessary to maintain the status quo.” The limitation on the court’s power to act after the arbitrator is appointed and authorized to act is subject to an exception. That is, if the matter is urgent and the arbitrator is unable to act or provide an adequate remedy, a party may move the court for provisional remedies.
On the other hand, once an arbitrator is appointed and authorized to act, the arbitrator may issue orders for provisional remedies or interim awards as is necessary to protect the effectiveness of the arbitration proceedings and promote expeditious resolution of the controversy. An arbitrator’s authority under UAA and now even the RUAA is broad. Precedents dictate that such authority has included measures being awarded equivalent to that of civil remedies such as specific performance under the contract (Island Creek Coal Sales Co. v. City of Gainesville, Fla., 729 F.2d 1046 (6th Cir. 1984), sale and proceeds of the property (Fraulo v. Gabelli, 37 Conn. App. 708, 657 A.2d 704 (1995)), and dissolution of a partnership (Fishman v. Streeter, 1992 WL 146830 (Ohio Ct. App., June 25, 1992)). But such power of an arbitrator is limited to the extent as is permitted by the parties’ arbitration agreement or rules of the arbitral institutional rules.
Disclosure of Facts Affecting Impartiality
Under § 29-5-309, TRUAA, all arbitrators that are requested to serve are required to disclose, upon reasonable inquiry, all known facts that are likely to affect their impartiality, including financial or personal interest in the outcome of the proceedings, or past or existing relationship with the parties, attorneys, or witnesses. This obligation that is imposed upon the arbitrator is continuing; that is, if at any time during the arbitration proceeding the arbitrator learns of facts that are likely to affect his or her impartiality, the arbitrator must disclose such facts to the parties. The standard by which such impartiality is judged is the “reasonable person” test (ANR Coal Co. v. Cogentrix of North Carolina, Inc., 173 F.3d 493 (4th Cir. 1999)).
If the arbitrator discloses a fact that is likely to affect his or her impartiality and either of the parties to the dispute make a timely objection to such disclosure, then such objection provides grounds to vacate an award issued by the arbitrator. Similarly, if an arbitrator fails to disclose such facts, the failure to disclose is also a ground for vacatur of the award. While such disclosures are definitively applicable to neutral arbitrators, they are not squarely appropriate for non-neutral arbitrators where the latter is generally appointed as an advocate for the party. Thus, if a non-neutral arbitrator fails to make a disclosure, such failure will lead to vacatur of an award only if it amounts “corruption” or to “misconduct prejudicing the rights of a party” under § 29-5-324(a)(2)(B) & (C).
Broad Powers of the Arbitrator in Conducting the Arbitration Proceedings
At the outset, the TRUAA gives a wide range of powers to the arbitrator to conduct the arbitration in a manner that is fair and leads to expeditious disposition of the proceeding. In a nutshell, under the TRUAA, an arbitrator has the power to:
- hold conferences with the parties (§ 29-5-316(a))
- determine admissibility, relevance, materiality, and weight of the evidence (§ 29-5-316(a)),
- adjudicate a request for summary disposition of a claim (§ 29-5-316(b)),
- set the time and place of the arbitration hearing (§ 29-5-316(c)), and
- permit discovery as is appropriate under the circumstances of the case including needs of the parties and cost efficacy (§ 29-5-318(c)).
Immunity From Civil Liability
While the UAA was silent on immunity of arbitrators from civil liability, RUAA borrows from Section 1280.1 of the California Code of Civil Procedure and Butz v. Economou, 438 U.S. 478, 511-12 (1978), where it was established the principle that the extension of judicial-like immunity to non-judicial officials is properly based on the “functional comparability” of the individual’s acts and judgments to the acts and judgments of judges.
- 29-5-315 of TRUAA cloaks the arbitrator with immunity from civil liability to the same extent as that of a judge of a court. Interestingly, immunity is also extended to arbitration organizations that administer the proceedings (Corey v. New York Stock Exch., 691 F.2d 1205, 1209 (6th Cir. 1982). It is imperative to note that the provision also gives arbitrators immunity from subpoenas or summons to testify in a judicial or administrative proceeding. However, the statute specifies that immunity is only from civil liability. Thus, an arbitrator is not immune from criminal liability arising for conduct in their arbitral or administrative roles (Babylon Milk & Cream Co. v. Horowitz, 151 N.Y.S.2d 221 (N.Y. Sup. Ct. 1956)).
If an award is authorized under a civil action and is justified, the TRUAA under § 29-5-322(a) enables arbitrators to make an award of punitive damages in all such cases where the agreement of the parties does not exclude issuing punitive damages. Because § 29-5-322 is a waivable provision, parties can either exclude or vary its application to the extent as is permitted by law.
To conclude, Tennessee’s enactment of the RUAA is a much welcome reform. Its adoption may result in Tennessee being chosen as a favored seat for both domestic and international arbitrations. The TRUAA is of utmost importance to in-house counsels and transactional lawyers who may consider designating TRUAA as the law governing arbitration proceedings in the arbitration clause itself. The unfolding of interpretation of the TRUAA afforded by courts and tribunal will strongly contribute to the jurisprudence of domestic arbitration in not just Tennessee but the country.
About Pragya Sharma
Pragya Sharma has been a practicing attorney in India since 2019. She recently received her LLM in Dispute Resolution with dual concentrations in Trial Litigation and International Arbitration from the Straus Institute for Dispute Resolution where she was also awarded a full-tuition scholarship from JAMS. Her talent and prior experience makes her the perfect fit for our Arbitration Associate. The position entails a multitude of things, but in a nutshell, she is helping to facilitate the growth of our arbitration department.