Maritime Law--Florida's Arbitration Code Is Now Revised

Those of us that practice maritime law regularly must always be on the lookout for the contract that may contain an arbitration clause. Thus, any laws related to arbitration are important to those of us practicing in this sector.

 

 

 

The Florida legislature has revised the Florida Arbitration Code ("FAC") and named it the Revised Florida Arbitration Code (the " Revised Act"). Since 1967, the FAC had gone mostly unchanged. The Revised Act addresses concepts that were not addressed in the old law, such as the ability of arbitrators to issue provision remedies, challenges based on notice, consolidation of separate arbitration proceedings, required conflict disclosures by arbitrators, among other major changes. The Revised Act lays out a detailed framework for international arbitration conducted under Florida law and repeals sections of the FAC. The Revised Act spells out what experienced arbitrators knew the case law to be, but codifies it all in one place, with clear language.

 

The new law, which took effect July 1, 2013, incorporates much of what courts decided in the last 50 years with several important twists. First,  unless precluded specifically by the arbitration agreement, a judge can consolidate proceedings with similar issues or people. For example, a contract dispute between naval architect and ship owner that has an arbitration clause can be consolidated with related disputes involving the ship builder and any subcontractors if there are common issues of law or fact. The argument here is that there is an economy and simplicity to that approach. Separate arbitration proceedings are more expensive and can produce inconsistent results.

 

Second, the Revised Act states that the court decides whether an agreement to arbitrate exists or a controversy is subject to an agreement to arbitrate. It leaves for the arbitrator to decide whether conditions precedent to arbitration have been met and whether a contract, containing an arbitration provision, is enforceable.

Third, the Revised Act allows a judge to appoint an arbitrator when either party cannot agree on the method for choosing an arbitrator or, for example, when one party simply refuses to cooperate in the process. While the prior law permitted court appointment of an arbitrator, the new statute has greater clarity.

Fourth, the Revised Act has a definitive section on subpoenas, witnesses and discovery. Under the old law, an arbitrator could issue a subpoena but had little power to enforce it when, for example, a witness refused to answer or one side committed an abuse. Now, the arbitrator can take action. Under the old law, attorneys often would file for sanctions due to non-compliance, but those were largely ignored because the arbitrator lacked the enforcement powers. The Revised Act gives the arbitrator the same authority as a judge to issue sanctions against a non-compliant party.

Fifth, the case law had allowed for the awarding of attorney's fees by an arbitrator only if both sides agreed. Under the Revised Act, an arbitrator can award reasonable attorney's fees and costs as if the proceeding were a civil action in court.

Sixth, the Revised Act also clarifies a number of matters relating to the arbitrators. They have always been required to provide extensive disclosure of potential conflicts of interest, such as prior relationships with lawyers or parties. The new law lays out a road map for those disclosures in a way that, if followed, reduces the likelihood of either party having grounds to ask a court to set aside an award.

Seventh, the Revised Act also codifies the immunity of the arbitrator, giving that person the same level of protection as a judge. This should make arbitrators more comfortable about taking on highly charged disputes.

The Revised Act, similar to its predecessor, sets out proper challenges to arbitrator decisions, such as how a party can seek modification of award. It also specifically permits arbitrators to issue pre-ruling rulings, such as an injunction and spells out that an arbitrator may award punitive damages.

 

The Revised Act applies only to agreements to arbitrate signed on or after July 1, 2013, unless the parties stipulate to be governed by the new law. The Revised Act will not eliminate court challenges, but it should provide a brighter line in addressing arbitration issues, which in this industry, is a plus.

If you are interested in receiving a copy of the Revised Act or wish to contact me, you may do so by writing to me at mov@chaloslaw.com.