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Judicial Review of Mandatory Arbitration

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Review of Mandatory Arbitration

Mandatory arbitration effectively cuts off the parties’ access to a trial court. Many courts have held that mandatory arbitration statutes that close the courts to litigants are void as against public policy and are unconstitutional. The arguments against enforcing mandatory arbitration statutes include:

⁃    they deprive one of property and liberty of contract without due process of law;

⁃    they violate the litigant’s 7th Amendment right to a jury trial and or state’s constitutional access to courts; and

⁃    they result in the unconstitutional delegation of legislative or judicial power in violation of state constitutional separation of powers provisions.

Mandatory arbitration is generally deemed constitutional if fair procedures are provided by the legislature and ultimate judicial review is available. As such, statutorily mandated arbitration requires a higher level of access to judicial review of the awards by the court. If a party can reject the arbitrator’s award and seek de novo judicial review, mandatory arbitration is generally considered constitutional. The right to reject the award and to proceed to trial is the sole remedy of the parties. If a party rejects an arbitrator’s award and challenges the case at trial, the court may impose sanctions on the party who fails to improve its position. Also, failing to attend the arbitration could forfeit the right of a party to reject the award and proceed to trial.

•    Discussion: What is your opinion with regard to the above-mentioned arguments against mandatory arbitration? Do you think that allowing a party to refuse an arbitrator’s award makes mandatory arbitration constitutional? Why or why not?

•    Practice Question: Brad and Angela have a dispute that is subject to a state law requiring mandatory arbitration. At the end of the arbitration, Angela is not happy with the award handed down by the arbitrators. What are her options for challenging the arbitration?

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