Any arbitration in California must comply with the California Arbitration Act, which regulates private arbitration in California and is intended to create and streamline the state arbitration process.
Specific provisions of the law have caused controversy, and a lawsuit is pending to determine whether provisions involving mandatory arbitration agreements should be honored. Still, the Act has been instrumental in establishing the importance of arbitration in California. It has made the state a haven for those hoping to use arbitration to resolve disputes.
This article will discuss the California Arbitration Act, particularly its ability to compel arbitration, the implications of the laws and lawsuits brought to halt compulsory arbitration or keep it going, and the importance of arbitration to law practice in California.
The California Arbitration Act governs how arbitration is completed in California and when and how a dispute must be submitted to arbitration.
The arbitration panel may apply substantive laws from California, the federal government, or other laws that the parties agree to apply to decide the dispute at issue in the case. Still, the California Arbitration Act will be applied to decide the procedure of the proceedings. These rules establish the procedure for the following parts of arbitration:
The Act outlines a standard procedure for the arbitration hearings; however, the parties can agree on other options for various proceedings.
The rules established in the California Arbitration Act are thorough and complete, allowing parties to understand the course of arbitration in California fully.
It is also important to note that the California Arbitration Act will cover disputes over the procedure unless a provision of the Federal Arbitration Act includes a contradiction.
The Federal Arbitration Act covers arbitrations in the United States and usually exists side-by-side with state law. However, the Federal Arbitration Act does allow the Federal Act to supersede any state law provision that conflicts with it directly.
State acts are usually modeled to comply with the Federal Arbitration Act, but occasionally, provisions will be preempted. While it does not happen often, in a piece examining the California Arbitration Act, it is important to note that the Act only exists as far as it is not in conflict with the Federal Arbitration Act.
The California Arbitration Act has a provision that allows the parties to petition a court to compel arbitration in agreement with a signed arbitration agreement unless the right to compel has been waived or there are grounds to rescind the agreement. This provision can be controversial because people often must sign arbitration agreements as part of everyday contracts.
This means that many of these agreements to arbitrate in California may be enforced against consumers and employees who have had to sign them. Because choosing to arbitrate requires people to give up their right to be heard in a court, people should not be forced to give up that right only because they had to sign a contract to use a product.
Including an arbitration agreement like this is called mandatory arbitration. It is particularly controversial in the employment law context when an employer requires a new employee to sign a contract with a broad arbitration agreement as a part of their hiring or retention paperwork because it requires people to give up the right to take an employment case to court as a prerequisite to starting a job with the company.
These agreements may allow companies to compel arbitration if a dispute arises between the parties based on the California Arbitration Act, which many people feel is not equitable to the employees.
Because of this controversy, the California Legislature signed a bill called California Assembly Bill (AB) 51, which prohibited employers from requiring employees to arbitrate claims arising under the California Fair Employment and Housing Act and related employment statutes. AB 51 sought to stop pre-dispute mandatory arbitration agreements in employment contracts.
While there are areas where mandatory arbitration can force people into unfair situations, there are also many cases where arbitration is necessary and needed and where mandatory arbitration is necessary for the parties to resolve their disputes. Arbitration brings many benefits, which are important to acknowledge when considering arbitration. These benefits include:
These benefits must be weighed against the potential drawbacks of arbitration, including:
While there are benefits and drawbacks to arbitration, the arbitration process does allow the parties to resolve their suits without having to go to court, saving the parties money and freeing up the court system. The California Arbitration Act allows people in California to participate in the arbitration. While laws seek to change aspects of the law and lawsuits to keep it the same, the overall law aids the courts in efficiently resolving disputes, which is the overall purpose of dispute resolution services.
To learn more about the California Arbitration Act, arbitration, negotiation, and more, contact ADR Times today!
