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The Judiciary Committee of the Connecticut General Assembly has considered the Revised Uniform Arbitration Act on seven occasions since 2002. It only made it out of committee once, in 2009, when it died on the House floor. Each bill had its problems, but so do the state's present arbitration statutes, which have not been significantly updated since 1949. In the meantime, arbitration has moved on and become more popular. It's time to fix the proposed bill and straighten out our statutes.
In 1955, the National Uniform Law Commission passed the first Uniform Arbitration Act. Connecticut did not adopt it. In 2000, the National Conference of Commissioners on Uniform State Laws, headed by Connecticut's Francis Pavetti, drafted the Revised Uniform Arbitration Act. Connecticut did not consider it until 2002, when it died in committee. It also died in subsequent years.
In 2008, 2009, and 2010, it failed because there was testimony by consumer advocates that boiler-plate arbitration provisions in contracts of adhesion are unfair. These clauses are drafted and inserted by big business, financial institutions, and stockbrokers among others. It was the opinion of consumer advocates that average consumers did not appreciate what they were signing and, even if they did, they had no choice. Arbitration was forced on the weaker party who either didn't want it or didn't understand it, and since the courts favor these clauses there should be true agreement among the parties.
There was also testimony that those big commercial parties then chose the forum in which the arbitration would be held and, in some cases, the law that would apply. Consumer advocates were also concerned about the fact that there is a limited appeal from arbitration. Therefore, the arbitrators can decide a case on the least favorable law to the consumer. This, they argue, is unconscionable.
In addition, there were concerns about notice. Under many arbitration procedures notice only has to be sent to the last known address. That is problematic for two reasons: first, that address may be wrong; and second, the average consumer does not understand the significance of that notice even if he or she receives it.
In addition, consumer advocates were concerned that the costs of arbitration, which is supposed to be relatively low, is actually significant and can prevent consumers from being able to exercise their rights. They further felt that insurance companies in general should not be allowed to force an insured into arbitration. One reason is because consumer advocates believe that arbitrators generally favor the party which has repeated business before the arbitration association. They believe that arbitrators who rule against the repeaters will not be asked to serve again. Therefore, the whole system is perceived to be unfair to consumers.
Some of these concerns are valid. On the other hand, the Revised Uniform Act would substantially improve our present statutes. It would improve requirements for notice for initiating arbitration proceedings, establishment of jurisdiction and venue, determination of what is arbitrable, and identificaiton of who will decide whether an agreement to arbitration exists in the first place. There is improvement with respect to compelling arbitration, motions to stay arbitration, and the appointment of arbitrators. There is also better guidance with respect to provisional remedies that can be ordered by the arbitrator. That includes injunctions and prejudgment remedies. In addition, there are improved provisions concerning the award of exemplary damages. The Revised Uniform Act better addresses appeals.
Our Connecticut Statutes Section 52-412, dealing with who can issue a subpoena, is superior to the Uniform Act, while the act is superior when it comes to enforcement.
We encourage the legislature to consider the negatives and positives of the Revised Uniform Arbitration Act so that it is acceptable to the legislature, business and consumers. That would make arbitration in Connecticut a voluntary and more attractive alternative for both sides but especially for those people who cannot afford to exercise their commercial rights in court.