Arbitration Law: Is There a RUAA in Missouri's Future?

by Timothy J. Heinsz¹

On August 3, 2000, the National Conference of Commissioners on Uniform State Laws (NCCUSL) unanimously passed major revisions to the Uniform Arbitration Act (UAA).² These revisions are the first substantive changes in 55 years to the UAA, which in some form is the basis of arbitration law in 49 jurisdictions. Missouri adopted the Uniform Arbitration Act in 1980.³

The federal counterpart to the UAA, the Federal Arbitration Act (FAA),⁴ has not been amended in any substantial fashion for nearly 75 years. Between Congress's passage of the FAA in 1925 and NCCUSL's approval of the UAA in 1955 and the NCCUSL's approval of the Revised Uniform Arbitration Act (RUAA) in August of 2000, the number and complexity of arbitration cases have grown dramatically, an evolution spurred on by favorable case-law development by the United States Supreme Court and appellate courts of the 50 states.

Thus, the time was ripe for NCCUSL to reconsider the UAA. The drafting committee appointed by NCCUSL to revise the UAA worked on this project for more than five years. It received the input and support of many interested observers, including the American Arbitration Association, the National Academy of Arbitrators, sections and committees of the American Bar Association (including the ADR Section, the Litigation Section, the Torts and Insurance Practice Section, the Business Law Section and the Senior Lawyers' Division), JAMS, CPR, and representatives of groups that utilize arbitration, such as securities, construction, labor-management relations, industries, and consumers. The result is a statute that already has received broad support from these arbitration organizations and groups.

Despite the importance that the UAA has played and that the RUAA is likely to play in developing the law of arbitration, it is incumbent that Congress consider a similar updating of the FAA because of this federal statute's paramount role. This role is due in large measure to the federal preemption doctrine espoused by the Supreme Court, holding that the FAA applies to all transactions that affect interstate commerce.⁵ Although parties may choose to arbitrate a case under state arbitration law,⁶ that state law must not interfere with the pro-arbitration policy of federal law. Another limitation on state law is that a state may not treat an arbitration contract differently and, particularly, less favorably than other contracts.⁷ This comprehensive tenet of federal preemption served as a backdrop to all the drafting committee's deliberations.

At the outset of its consideration of revisions to the UAA, the drafting committee sought (1) to modernize outdated provisions, clarify ambiguities under that act, and codify important case-law developments; (2) to give primary consideration to the autonomy of the contracting parties, provided their arbitration agreement conforms to basic notions of fundamental fairness because arbitration is a consensual process; (3) to maintain the character of arbitration that establishes it as a means of dispute resolution distinct from litigation, particularly in regard to efficiency, timeliness and cost; and (4) to limit court involvement in the arbitration process unless unfairness or denial of justice produces clear need for such involvement, because most parties intend the decisions of arbitrators to be final and binding.

The following are some of the primary changes in the RUAA.

E-arbitration

The UAA was drafted and implemented during a time when most persons conducted commerce through paper transactions. Neither the UAA nor the FAA envisioned today's technological revolution, particularly in electronic, digital, and other means of communication. For instance, both statutes require that an arbitration agreement is enforceable only if it is "written";⁸ the UAA also requires a "hearing"⁹ and mandates that an arbitrator's award be "in writing and signed."¹⁰ These prerequisites seem to intend either written documents or oral hearings before the arbitrator.

Section 6(a) of the RUAA requires that the agreement be "contained in a record," which section 1(6) defines to mean not only a written document in a "tangible medium," but also "information . . . that is stored in an electronic or other medium and is retrievable in perceivable form." This definition would include electronic documents.

Concerning a hearing, § 15(b) allows arbitrators, where appropriate, to decide cases by "summary disposition," which can occur based on documentation, such as electronic information, that the parties submit to the arbitrator. Even where an arbitrator decides a hearing is necessary, section 15(a) grants the arbitrator broad powers to "conduct an arbitration in such manner as the arbitrator considers appropriate for a fair and expeditious disposition of the proceeding." The arbitrator may use videotape, audio presentations, teleconferencing, or other means of modern communications to present the witnesses' testimony.

With respect to the requisites for a valid award, RUAA section 19(a) states that the award must be in a "record," which again includes an e-document "signed or otherwise authenticated" by the arbitrator.¹¹ Both the Official Comment to § 19¹² and the inclusion of § 30, which adopts the Electronic Signatures in Global and National Commerce Act,¹³ make clear that an arbitrator may validate an award by e-signature. Through these various provisions, the drafting committee insured that arbitration in the 21st century could occur by whatever electronic, digital, or other technological means become feasible.

Arbitrability

Section 6(a) of the RUAA restates the proposition that was the central premise of the UAA, as well as the FAA, that agreements to arbitrate are "enforceable . . . except upon a ground that exists at law or in equity for the revocation of contract." Section 6(b) and (c) states who decides the important issue of arbitrability when the parties have not decided themselves. Matters of substantive arbitrability, i.e., "whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate,"¹⁴ are for the courts to decide.¹⁵ Matters of procedural arbitrability, i.e., "whether a condition precedent to arbitrability has been fulfilled,"¹⁶ such as time limits, notice, laches, or other prerequisites, are for the arbitrator to decide. This dichotomy about who determines substantive and procedural arbitrability follows the majority approach of courts under both the UAA and FAA.¹⁷

In addition, section 6(c) incorporates the "separability" doctrine of Prima Paint Corp. v. Flood & Conklin Manufacturing Co.¹⁸ by stating that the arbitrator determines "whether a contract containing a valid agreement to arbitrate is enforceable." Under this holding, if a party challenges the enforceability of the underlying agreement, i.e., the "container" contract, and not just the arbitration clause on grounds such as fraud, illegality, mutual mistake, unconscionability, or the like, the arbitrator and not the court is to decide the validity of the contract. The separability doctrine not only is the law under the FAA, but it also has been followed by a majority of decisions under the UAA.¹⁹

Remedies

Section 8 of the RUAA addresses provisional remedies, and § 21 covers final remedies. To validate the integrity of the arbitration process, a party to an arbitration often needs a temporary remedy, for instance to preserve property, secure assets, or provide some other preliminary relief. The critical issues are who can grant such provisionary relief and under what circumstances. In § 8 the general rule is that the arbitrator will decide on temporary relief if the request is made after the arbitrator's appointment. However, a court may decide on a provisional remedy either if a party requests one before an arbitrator is appointed, or "if the matter is urgent and the arbitrator is not able to act timely or the arbitrator cannot provide an adequate remedy."²⁰ The standard for either the arbitrator or the court is whether a provisional remedy is necessary "to protect the effectiveness of the arbitration proceeding and to promote the fair and expeditious resolution of the controversy."²¹

Section 21 demonstrates both the breadth of and the limitations on the discretion of arbitrators to award final remedies and of parties to contract for specified remedies. Section 21(c) retains the general proposition from the UAA²² and case law²³ that the authority of arbitrators to award relief exceeds even that of judges in civil actions. According to this subsection, the fact that a remedy could not or would not be granted by the court "is not ground for refusing to confirm . . . or for vacating an award."

However, the RUAA places special limits on the remedial power of arbitrators regarding attorney's fees and punitive damages. First, § 21(b) reverses the position of the UAA²⁴ and allows arbitrators to award attorney's fees and other reasonable expenses of the arbitration. Both § 21(a) on punitive damages and § 21(b) on attorney's fees provide that arbitrators can assess these remedies only "if such an award is authorized by law in a civil action involving the same claim."

The RUAA places even further constraints on arbitral awards of punitive damages. Section 21(a) requires that the evidence at the arbitration hearing must be sufficient to meet the legal standard that otherwise would apply to the claim. Moreover, § 21(e) instructs the arbitrator to specify in the award the basis in law and in fact justifying a punitive damages award and to state separately the amount of punitive damages. These special requirements for punitive damages will likely cause arbitrators to hesitate before making such awards and will increase the likelihood that losing parties will challenge arbitral awards of punitive damages in subsequent court actions.

Because § 21 is a waivable provision under RUAA § 4(a), the statute on its face allows parties to agree to such actions as eliminating punitive damages or attorney's fees. However, a note of caution is appropriate. Section 4(a) allows a waiver of RUAA provisions only "to the extent permitted by law." Federal and state appellate decisions have held that in arbitration cases involving statutory rights, such as those under anti-discrimination laws, courts will defer to arbitration only where the arbitrator has the same remedial power as a judge would have if the case were tried in court.²⁵ Typically, this power includes the authority of an arbitrator to award punitive relief or attorney's fees. Thus, in some instances these decisions limit party autonomy to shape the remedies available in their arbitration process.

Consolidation

The RUAA contains a new provision allowing parties to make a motion to the court to consolidate separate arbitration proceedings.²⁶ Section 10(a) gives a court discretion to order consolidation of separate arbitrations if: (1) the claims arise from the same transactions, (2) a common issue of law or fact creates the possibility of conflicting decisions, and (3) the "prejudice resulting from a failure to consolidate is not outweighed by the risk of undue delay or prejudice to the rights of or hardship to parties opposing consolidation." Section 10(c) eliminates consolidation where it is prohibited by the parties' arbitration agreement.

Section 10's approach to consolidation is significantly different from that which the case law has developed under the FAA. The default rule under § 10 of the RUAA is that, in the absence of an agreement regarding consolidation, the court may order consolidation provided the three conditions outlined above are present. Under the FAA courts have not allowed consolidation unless the parties specifically agree to it.²⁷ The drafting committee believed that § 10 provides a more efficient disposition of cases than the FAA when multiple parties are involved in a matter involving essentially the same claims because all issues may be resolved in a single forum and this section also avoids the possibility of contradictory results.²⁸

Disclosure

Another new provision added to the RUAA is § 12, requiring arbitrators to disclose matters that might appear to cause or actually cause a conflict of interest.²⁹ The drafting committee believed such disclosure is crucial to insure the fairness of an arbitration result, especially arbitrations involving consumers, employees, franchisees, or others, where it is very likely that one of the parties will not have access to information about a particular arbitrator because that party does not use arbitration frequently. The two primary criteria for disclosure are that (1) the fact is known to the arbitrator, and (2) that a reasonable person would conclude that the fact causes a conflict affecting the arbitrator's impartiality.³⁰ Section 12(a) specifically requires an arbitrator to disclose "a financial or personal interest in the outcome of the arbitration proceeding; and a . . . relationship with any of the parties to the agreement to arbitrate or the arbitration proceeding, their counsel or representatives, a witness, or another arbitrator."

Either failure to disclose information of a conflict, or an arbitrator's decision to continue to serve after the arbitrator makes disclosure and a party timely objects, may result in a court vacating the award if the court believes the facts cause evident partiality by the arbitrator. Because courts are properly hesitant to set aside arbitration awards for evident partiality even where some conflict exists,³¹ § 12(e) presumes evident partiality if a neutral arbitrator fails to "disclose a known, direct, and material interest in the outcome of the arbitration proceeding or a known, existing, and substantial relationship with a party."

Section 4(a) permits parties to waive the requirement that non-neutral arbitrators make disclosure of interests or relationships. However, § 4(b)(3) does not allow the parties, before a claim arises, to unreasonably restrict the right under § 12 to disclosure of facts by a neutral arbitrator. The RUAA intends to encourage arbitrators at the outset of the proceeding to disclose to the parties any potential conflict in order to insure a just result and to avoid later litigation about the arbitrator's impartiality.

Arbitral Immunity

To insure the independence of arbitrators and the integrity of the arbitral process, § 14 of the RUAA codifies case law that provides both arbitrators and neutral arbitration organizations immunity from civil liability to the same extent as a judge.³² Despite the doctrine of arbitrator immunity, losing parties oftentimes attempt to involve arbitrators or arbitration organizations in legal actions. To discourage such efforts, § 14(d) makes arbitrators or representatives of arbitration organizations "not competent to testify" in any judicial, administrative, or similar proceeding except for any claims filed by the arbitrator or arbitration organization.³³ Additionally, § 14(e) requires a court to award to arbitrators and arbitration organizations attorney's fees and reasonable litigation expenses against any person who is unsuccessful in litigation against them.

Discovery

For the drafting committee, the issue of discovery epitomized the conflict over whether arbitration would become merely a surrogate form of litigation or a dispute-resolution mechanism separate from litigation. One of the chief strengths of arbitration is its relative cost savings and efficiency due, in large measure, to its lack of discovery. On the other hand, parties often need information from the other side to present sufficient evidence for a fair hearing, and discovery has become an integral part of many complex arbitration cases.

During the first reading of the RUAA in 1999, the Uniform Law Commissioners rejected a commissioner's motion to make civil discovery rules applicable to arbitrations. Instead, § 17(c) gives arbitrators discretion to order prehearing discovery but cautions them to do so only when "appropriate in the circumstances, taking into account the needs of the parties to the arbitration proceeding and other affected persons and the desirability of making the proceeding fair, expeditious, and cost effective." The Official Comments to § 17(c) underscore the limited nature of discovery in arbitration proceedings. Moreover, because § 17(c) is a waivable provision, the parties may determine their own discovery rules.³⁴

Conclusion

Like any important statutory change, the RUAA involved compromises by many of those involved who had differing interests. Nevertheless, all who participated in the drafting process worked toward the same end of a more efficient, modern and fair arbitration system. The support of the RUAA by so many diverse groups involved in the arbitration process and its unanimous passage by NCCUSL indicate that the act meets these goals. Now comes the difficult endeavor of passage of the RUAA in all 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands and of the long-needed overhaul of the FAA. Missouri has an opportunity to be one of the first states to enact RUAA. Senator Harry Wiggins has introduced RUAA in the Missouri General Assembly.³⁵ Passage of the Revised Uniform Arbitration Act by Missouri would make it a leader in the field of dispute resolution.

Endnotes

¹ Timothy J. Heinsz is dean and Earl F. Nelson Professor of Law at the University of Missouri School of Law in Columbia. Dean Heinsz is a member of The Missouri Bar and has his juris doctor degree from the Cornell Law School.

² The Revised Uniform Arbitration Act may be found at http://www.law.upenn.edu/bll/ulc/ulc_frame.htm.

³ Section 435.350, RSMo 2000. See also Keith S. Bozarth, Comment, The Uniform Arbitration Act in Missouri, 46 Mo. L. Rev. 627 (1981).

⁴ 9 U.S.C. §§ 1, et seq.

⁵ Doctor's Assocs. v. Casarotto, 517 U.S. 681 (1996); Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (1995); Perry v. Thomas, 482 U.S. 483 (1987); Southland Corp. v. Keating, 465 U.S. 1 (1984); Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967).

⁶ See, e.g., Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995) (noting that intent of the contracting parties determines whether state law disallowing punitive damages applies to arbitration); Volt Info. Scis., Inc. v. Leland Stanford Jr. Univ., 489 U.S. 468 (1989) (concluding that Federal Arbitration Act did not preempt California law that permits court to stay arbitration pending resolution of related litigation involving third parties not bound by arbitration agreement where parties agreed in contract to abide by state rules of arbitration); Ekstrom v. Value Health, Inc., 68 F.3d 1391 (D.C. Cir. 1995) (finding that limitations period in Connecticut's law that was applicable according to the arbitration agreement was not preempted by FAA).

⁷ See, e.g., Doctor's Assocs. v. Casarotto, 517 U.S. 681 (1996); see also Green Tree Fin. Corp. v. Randolph, 531 U.S. ____, 121 S. Ct. 513 (2000) (concluding that in light of the FAA's purpose of putting arbitration clauses on equal footing with other contracts, claimant could not escape the provisions of the contract merely because the agreement is silent as to arbitration costs; rather, the party seeking to overcome a valid arbitration agreement on the grounds that it is overly expensive bears the burden of showing the likelihood of incurring the costs); Stout v. Byrider, 228 F.3d 709 (6th Cir. 2000) (noting that in claim based on fraud and violation of state sales protection act that FAA preempts inconsistent state law); Warren-Guthrie v. Health Net, 101 Cal. Rptr. 2d 260 (Cal. Ct. App. 2000) (holding that statute allowing a state court to disregard an arbitration clause, and order joinder of all parties in a single action or proceeding, due to the possibility of inconsistent rulings, does not establish a defense generally applicable to contracts, but is specifically limited to arbitration clauses, and thus, statute is inconsistent with, and is preempted, by Federal Arbitration Act where statute is used to avoid or delay arbitration of dispute over a contract involving interstate commerce that is governed by FAA).

⁸ UAA § 1; 9 U.S.C. § 2. See also § 435.465, RSMo 2000 (stating that Missouri's version of the UAA "shall apply only to written agreements").

⁹ UAA § 5.

¹⁰ UAA § 8(a).

¹¹ This differs from § 435.385, RSMo 1994, which follows the UAA and states that "[t]he award shall be in writing and signed by the arbitrators joining in the award."

¹² The RUAA with Official Comments may be found at "2000 Styled Act with Comments, Dec. 13, 2000," http://www.law.upenn.edu/bll/ulc/ulc/uarba/arb1031.htm.

¹³ 15 U.S.C. §§ 7001, et seq. (2000). The Electronic Signatures in Global and National Commerce Act makes an electronic signature valid by attaching to or "logically associating with the" record "an electronic sound, symbol or process . . . with the intent to sign the record." 15 U.S.C. § 7006 (2000).

¹⁴ RUAA § 6(b).

¹⁵ See, e.g., Silver Dollar City, Inc. v. Kitsmiller Constr. Co., Inc., 874 S.W.2d 526 (Mo. App. S.D. 1994) (stating that the trial court should resolve questions of a contract's validity).

¹⁶ RUAA § 6(c).

¹⁷ First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995); City of Cottonwood v. James L. Fann Contracting, Inc., 877 P.2d 284, 292 (Ariz. Ct. App. 1994); Amalgamated Transit Union Local 900 v. Suburban Bus Div. of the Reg'l Transp., 634 N.E.2d 469, 474 (Ill. App. Ct. 1994); Des Moines Asphalt & Paving Co. v. Colcon Indus. Corp., 500 N.W.2d 70, 72 (Iowa 1993); City of Morris v. Duininck Bros. Inc., 531 N.W.2d 208, 210 (Minn. Ct. App. 1995); Gaines v. Financial Planning Consultants, Inc., 857 S.W.2d 430, 433 (Mo. App. E.D. 1993); Exber, Inc. v. Sletten Const. Co., 558 P.2d 517 (Nev. 1976); State v. Stremick Const. Co., 370 N.W.2d 730, 735 (N.D. 1985); but see In the Matter of Smith Barney, Harris Upham & Co. v. Luckie, 647 N.E.2d 1308 (N.Y. 1995) (stating that under New York arbitration law a court, rather than an arbitrator, decides whether a statute of limitations time bars an arbitration).

¹⁸ 388 U.S. 395 (1967).

¹⁹ A majority of states recognize some form of the separability doctrine under their state arbitration laws. Old Republic Ins. Co. v. Lanier, 644 So. 2d 1258 (Ala. 1994); U.S. Insulation, Inc. v. Hilro Constr. Co., 705 P.2d 490 (Ariz. Ct. App. 1985); Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street, 673 P.2d 251 (Cal. 1983); Hercules & Co. v. Shama Restaurant Corp., 613 A.2d 916 (D.C. 1992); Brown v. KFC Nat'l Mgmt. Co., 921 P.2d 146 (Haw. 1996); Quirk v. Data Terminal Sys., Inc., 400 N.E.2d 858 (Mass. 1980); Matter of Weinrott & Carp, 298 N.E.2d 42 (N.Y. 1973); Weiss v. Voice/Fax Corp., 640 N.E.2d 875 (Ohio 1994); Jackson Mills, Inc. v. BT Capital Corp., 440 S.E.2d 877 (S.C. 1994); South Carolina Pub. Serv. Auth. v. Great Western Coal, 437 S.E.2d 22 (S.C. 1993); Gerwell v. Moran, 10 S.W.3d 28 (Tex. Ct. App. 1999); Schneider, Inc. v. Research-Cottrell, Inc., 474 F. Supp. 1179 (W.D. Pa. 1979) (applying Pennsylvania law); New Process Steel Corp. v. Titan Indus. Corp., 555 F. Supp. 1018 (S.D. Tex. 1983) (applying Texas law); Pinkis v. Network Cinema Corp., 512 P.2d 751 (Wash. Ct. App. 1973). See also William W. Park, Determining Arbitral Jurisdiction: Allocation of Tasks Between Courts and Arbitrators, 8 Am. Rev. Int'l Arb. 133, 143 (1997) ("[T]he separability doctrine permits arbitrators to invalidate the main contract . . . without the risk that their decisions will call into question the validity of the arbitration clause from which they derive their power. In other words, the separability doctrine gives arbitrators the tools with which to do their job, by examining fully the parties' agreement.").

Other states have either limited or declined to follow the Prima Paint doctrine on separability. Rosenthal v. Great Western Fin. Sec. Corp., 14 Cal. 4th 394, 926 P.2d 1061 (Cal. 1996); Goebel v. Blocks and Marbles Brand Toys, Inc., 568 N.E.2d 552 (Ind. Ct. App. 1991); City of Wamego v. L.R. Foy Constr. Co., 675 P.2d 912 (Kan. Ct. App. 1984); George Engine Co. v. Southern Shipbuilding Corp., 376 So. 2d 1040 (La. Ct. App. 1977); Holmes v. Coverall N. Am., Inc., 633 A.2d 932 (Md. 1993); Atcas v. Credit Clearing Corp. of Am., 197 N.W.2d 448 (Minn. 1972); Shaw v. Kuhnel & Assocs., 698 P.2d 880 (N.M. 1985); Shaffer v. Jeffery, 915 P.2d 910 (Okla. 1996) (recognizing that majority of states apply the doctrine of separability but declining to follow the doctrine); Frizzell Const. Co. v. Gatlinburg L.L.C., 9 S.W.3d 79 (Tenn. 1999).

²⁰ RUAA § 8 (b)(2).

²¹ RUAA § 8(a), (b)(1).

²² UAA § 12(a).

²³ III Ian B. Macneil, Richard E. Speidel & Thomas J. Stipanowich, Federal Arbitration Law Ch. 36 (1995) [hereinafter "Macneil Treatise"]; Michael Hoellering, Remedies in Arbitration, Arbitration and the Law (1984); David Co. v. Jim Miller Constr., Inc., 444 N.W.2d 836, 842 (Minn. 1989); In the Matter of SCM Corp. & Fisher Park Lane Co., 358 N.E.2d 1024, 1028 (N.Y. 1976).

²⁴ UAA § 10.

²⁵ See, e.g., Cole v. Burns Int'l Sec. Serv., 105 F.3d 1465 (D.C. Cir. 1997) (stating that employee with race discrimination claim under Title VII is bound by pre-dispute arbitration agreement under FAA if the employee has the right to the same relief as if he had proceeded in court); Graham Oil Co. v. ARCO Prods. Co., 43 F.3d 1244 (9th Cir. 1994), cert. denied, 516 U.S. 907 (1995) (providing that arbitration clause compelling franchisee to surrender important rights, including right of attorney fees, guaranteed by the Petroleum Marketing Practices Act, contravenes this statute); DeGaetano v. Smith Barney, Inc., 75 FEP Cases 579 (S.D.N.Y. 1997) (finding that award under arbitration clause requiring each side to pay own attorney's fees in Title VII claim on which plaintiff prevailed but where arbitrators refused to award attorney's fees set aside as a manifest disregard of the law; the arbitration of statutory claims as a condition of employment are enforceable only to the extent that the arbitration preserves protections and remedies afforded by the statute); Armendariz v. Found. Health Psychcare Serv. Inc., 6 P.3d 669 (Cal. 2000) (stating limitation in arbitration agreement on remedies for employee to only back pay and not allowing employee in anti-discrimination claim to attempt recovery of punitive damages or attorney's fees contributes to determination that arbitration clause is void as unconscionable).

²⁶ A growing number of jurisdictions have enacted statutes allowing courts to address multiparty conflict through consolidation of proceedings or joinder of parties even in the absence of specific contractual provisions authorizing such procedures. See Cal. Civ. Proc. Code §1281.3 (West Cum. Supp. 2001) (consolidation); Ga. Code Ann. § 9-9-6 (Cum. Supp. 2000) (consolidation); Mass. Gen. Laws Ann. ch. 251, § 2A (West 1997) (consolidation); N.J. Stat. Ann. § 2A-23A-3 (West 2000) (consolidation); S.C. Code Ann. § 15-48-60 (Cum. Supp. 2000) (joinder); Utah Code Ann. § 78-31a-9 (1996) (joinder).

²⁷ See generally III Macneil Treatise, infra note 20, at §33.3; Glencore, Ltd. v. Schnitzer Steel Prod. Co., 189 F.3d 264 (2d Cir. 1999) (finding that consolidation is not appropriate under the FAA unless the arbitration agreement specifically allows for consolidation); Government of the United Kingdom of Great Britain v. Boeing Co., 998 F.2d 68, 69 (2d Cir. 1993) (holding that "a district court cannot order consolidation of arbitration proceedings arising from separate agreements to arbitrate absent the parties' agreement to allow such consolidation"); Am. Centennial Ins. Co. v. Nat'l Cas. Co., 951 F.2d 107, 108 (6th Cir. 1991) (stating that the district court does not have power to consolidate when the agreement is silent on the matter).

²⁸ Some state courts have interpreted their arbitration statutes to grant courts authority to order consolidation or the joining of arbitration cases to promote efficiency and avoid conflicting results. Blue Cross of Calif. v. Superior Ct., 78 Cal. Rptr. 2d 779 (Cal. Ct. App. 1998); Litton Bionetics, Inc. v. Glen Constr. Co., 437 A.2d 208 (Md. 1981); Grover-Dimond Assoc. v. Am. Arbitration Ass'n, 211 N.W.2d 787 (Minn. 1973); Polshek v. Bergen County Iron Works, 362 A.2d 63 (N. J. Super. Ct. Ch. Div. 1976); County of Sullivan v. Edward L. Nezelek, Inc., 366 N.E.2d 72 (N.Y. 1977); Exber v. Sletten Constr. Co., 558 P.2d 517 (Nev. 1976); Plaza Dev. Servs. v. Joe Harden Builder, Inc., 365 S.E.2d 231 (S.C. Ct. App. 1988).

²⁹ The Supreme Court of Missouri, in Orr v. Farmers Mutual Hail Insurance Company of Missouri, noted that unbiased arbitrators are essential for a fair arbitral result. 201 S.W.2d 952, 957 (Mo. 1947) (stating that it is "well settled that when parties sign agreements to submit their differences to arbitration . . . the persons selected as arbitrators . . . must not be interested, biased or prejudiced"). Furthermore, § 435.405, RSMo 2000, states that "the court shall vacate an award" upon proof of "evident partiality by an arbitrator appointed as a neutral or corruption in any of the arbitrators or misconduct prejudicing the rights of any party."

³⁰ Much of the law on the issue of arbitrator disclosure and vacatur for partiality stems from the seminal case of Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968), a decision under the FAA. In that case the Supreme Court held that an undisclosed business relationship between an arbitrator and one of the parties constituted "evident partiality" requiring vacating of the award. Members of the Court differed, however, on the standards for disclosure. Justice Black, writing for a four-judge plurality, concluded that disclosure of "any dealings that might create an impression of possible bias" or creating "even an appearance of bias" would amount to evident partiality. Id. at 149. Justice White, in a concurrence joined by Justice Marshall, supported a more limited test that would require disclosure of "a substantial interest in a firm which has done more than trivial business with a party." Id. at 150. Three dissenting justices favored an approach under which an arbitrator's failure to disclose certain relationships established a rebuttable presumption of partiality.

Since Commonwealth Coatings, most circuit courts of appeals have applied the test as enunciated by Justice White. See, e.g., Morelite Constr. v. New York City Dist. Council Carpenters Benefit Funds, 748 F.2d 79 (2d Cir. 1984); ANR Coal Co., Inc. v. Cogentrix of North Carolina, 173 F.3d 493, 499 n.3 (4th Cir. 1999) (noting that courts have given the concurrence particular weight); Health Servs. Mgmt. Corp. v. Hughes, 975 F.2d 1253 (7th Cir. 1992); Merit Ins. Co. v. Leatherby Ins. Co., 714 F.2d 673 (7th Cir. 1983); Toyota of Berkeley v. Automobile Salesmen's Union, Local 1095, 834 F.2d 751 (9th Cir. 1987); Ormsbee Dev. Co. v. Grace, 668 F.2d 1140 (10th Cir. 1982); Middlesex Mut. Ins. Co. v. Levine, 675 F.2d 1197(11th Cir. 1982); Dowd v. First Omaha Sec. Corp., 495 N.W.2d 36 (Neb. 1993) (discussing Nebraska interpretation); Beck Suppliers, Inc. v. Dean Witter Reynolds, Inc., 558 N.E.2d 1187, 1193 (Ohio Ct. App. 1988) (stating that other Ohio decisions confirm that more is needed than "a speculation or appearance of bias" but holding the arbitrator was impartial because there was no "proof of actual bias," and the relationship between the arbitrator and appellees was "too indirect and remote to substantiate any inference of bias"); DeBaker v. Shah, 533 N.W.2d 464, 467 n.4 (Wis. 1995) (noting that courts have not followed the Black standard; rather, "they have adopted the reasoning of Justice White's concurrence in the case which recognizes that arbitrators, who are often effective because of their position in the marketplace, should not be disqualified because of a business relationship if it is disclosed or is de minimus").

³¹ ANR Coal Co., Inc. v. Cogentrix of North Carolina, 173 F.3d 493 (4th Cir. 1999) (finding that an arbitrator's failure to disclose relationship between arbitrator's law firm and a party did not warrant vacating the award for evident partiality because "nondisclosure, even of such facts, has no independent legal significance and does not in itself constitute grounds for vacating an award"); Woods v. Saturn Distribution Corp., 78 F.3d 424 (9th Cir. 1996) (holding that "[t]he party challenging the arbitration decision has the burden of showing partiality" when claiming arbitrators had a financial interest in the outcome of the proceeding); Polin v. Kellwood Co., 103 F. Supp. 2d. 238, 255 (S.D. N.Y. 2000) (stating that "to avoid summary confirmation of an arbitration" where one party alleges that arbitrator was biased, the standard is "high and a party moving to vacate the award has the burden of proof"); Washburn v. McManus, 895 F. Supp. 392 (D. Conn. 1994) (noting that the FAA has a "strong presumption in favor of enforcing . . . awards" and that a court will not vacate an award on grounds of evident partiality due to arbitrator's undisclosed involvement in litigation similar to the subject matter of the arbitration).

³² See Wasyl, Inc. v. First Boston Corp., 813 F.2d 1579, 1582 (9th Cir. 1987) (stating that "[w]hile the [Federal Arbitration] Act does not so provide, case law dictates that arbitrators are immune from civil liability for acts within their jurisdiction arising out of their arbitral functions in contractually agreed upon arbitration hearings. . . . The functional comparability of the arbitrators' decisionmaking process and judgments to those of judges . . . generates the same need for independent judgment free from the threat of lawsuits."); see also New England Cleaning Servs., Inc. v. Am. Arbitration Ass'n, 199 F.3d 542 (1st Cir. 1999); Corey v. New York Stock Exch., 691 F.2d 1205, 1209 (6th Cir. 1982) (listing circuits that have found that arbitrators are functionally comparable to judges and should thus be afforded immunity); Aerojet-General Corp. v. Am. Arbitration Ass'n, 478 F.2d 248 (9th Cir. 1973); Cort v. Am. Arbitration Ass'n, 795 F. Supp. 970 (N.D. Cal. 1992); Boraks v. Am. Arbitration Ass'n, 517 N.W.2d 771 (Mich. Ct. App. 1994); Candor Sch. Dist. v. Am. Arbitration Ass'n, 411 N.Y.S.2d 162 (N.Y. Sup. Ct. 1978). Four states presently provide some form of arbitral immunity in their arbitration statutes. Cal. Civ. Proc. Code § 1297.119 (West Cum. Supp. 2001); Fla. Stat. Ann. § 44.107 (West 1998); N.C. Gen. Stat. § 7A-37.1 (1995); Utah Code Ann. § 78-31b-4 (1996).

³³ This change is also in keeping with § 435.014, RSMo 2000, which prevents arbitrators from being subpoenaed "or otherwise compelled to disclose any matter" related to the arbitration, and regards arbitral proceedings as settlement negotiations, thus precluding them from being used as evidence. See also Kenney v. Emge, 972 S.W.2d 616 (Mo. App. E.D. 1998) (stating that mediator should not have been compelled to testify as to proceedings).

³⁴ For instance, in BJC Health Sys., Inc. v. Group Health Plan, Inc., 30 S.W.3d 198 (Mo. App. E.D. 2000) the court upheld the parties' agreement entered into prior to arbitration providing that materials related to that arbitration were confidential and concluded that this information was not discoverable in unrelated arbitration).

³⁵ S. 75, 91st Gen. Assem., Reg. Sess. (Mo. 2001).