Bill Would Add Due Process Rights to Arbitration Process

Sen. Jeff Sessions (R-AL) has reintroduced legislation designed to encourage parties to use arbitration as a means of dispute resolution. The Fair Arbitration Act (S. 1186) would amend the Federal Arbitration Act by including a set of due process rights for participants, imposing time limits for initiating and resolving a dispute, and establishing certain requirements for arbitration clauses in contracts. Among other changes, the bill seeks to accomplish the following:

• Stipulate that arbitration clauses in contracts include, in bold, large print, capital letters, a heading announcing the arbitration agreement. To be enforceable, the agreement must state whether it is binding or optional, provide contact information where a party can get more information about the costs and fees associated with arbitration, and state that the individual retains the right to sue in small claims court for claims not exceeding $50,000.

• Give all parties equal voice in the arbitrator’s selection. Unless otherwise agreed, the arbitrator must be a member in good standing of the bar of the highest court in the state in which the arbitration is held.
• Provide that all parties have the right to be represented by counsel at their own expense.
• Allow the arbitration to be held in a forum that is reasonably convenient for the employee or consumer.
• Establish a right for all parties to conduct discovery, present evidence, and cross-examine witnesses.
• Create a timeline for answering a complaint, scheduling a hearing, and resolving the dispute. Under the terms of the measure, a defendant would be required to file an answer to the complaint not more than 30 days after it is filed. The arbitrator would have 90 days after the answer is filed to hold a hearing. A final written decision explaining the arbitrator’s rationale for the determination would be required to be rendered within 30 days of the hearing, although extensions would be granted under extraordinary circumstances.
• Allow parties to request reimbursement for arbitration fees “as part of the remedy in accordance with applicable law or in the interests of justice” and to waive, defer, or reduce any fee in the event of “extreme hardship.”

When he last introduced this bill in 2007, Sen. Sessions claimed that it would “ensure that those who can least afford to go to court can go to a less expensive arbitrator with confidence that the arbitration process will treat them justly,” and “make the arbitration system fairer and more user-friendly for both sides of a dispute.”

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