Stern, David S.

Troetschel, Henry T., Jr.

English

University of Miami School of Law

University of Miami Law SchoolInstitutional RepositoryUniversity of Miami Law Review2-1-1953The Role of Modern Arbitration in the ProgressiveDevelopment of Florida LawDavid S. SternHenry T. Troetschel Jr.Follow this and additional works at: http://repository.law.miami.edu/umlrThis Article is brought to you for free and open access by Institutional Repository. It has been accepted for inclusion in University of Miami LawReview by an authorized administrator of Institutional Repository. For more information, please contact library@law.miami.edu.Recommended CitationDavid S. Stern and Henry T. Troetschel Jr., The Role of Modern Arbitration in the Progressive Development of Florida Law, 7 U. Miami L.Rev. 205 (1953)Available at: http://repository.law.miami.edu/umlr/vol7/iss2/6THE ROLE OF MODERN ARBITRATION IN THE PROGRESSIVEDEVELOPMENT OF FLORIDA LAWDAVID S. STERN*andHENRY T. TROETSCHEL, JR.**Florida's present Arbitration.Act was first passed in 1828.' A typicalstatute of the nineteenth century variety, it contains the strengths andweaknesses that those enactments shared.Usually these statutes attempted to give strength to a weak, neglectedcreature of the common law - arbitration. Common law arbitration was aperilous procedure indeed. Either party to the submission agreement couldby notice or action withdraw at any time, 2 leaving the other party with amere action for damages. Such actions were distinguished by their failureto gain adequate relief for what the party had lost.3Attacked by courts which feared a loss of jurisdiction, unused bylawyers who mistakenly perceived it to be identical with lost fees, arbitrationneeded statutory medicine. 4Nineteenth century statutes usually provided that once a dispute hadarisen the parties could submit this dispute to arbitration, and that suchsubmission agreement would be irrevocable.-" With one exception courts*B.S., 1939, LL.B., 1947, Harvard University; LL.M., 1949, New York University;Associate Professor of Law, University of Miami; Member New York and Florida Bars."A.B.; 1946, LL.B., 1952, University of Miami; Graduate Fellow, Yale UniversitySchool of Law; Member Florida Bar.Editor's Note: This paper suggetss a need for a modern arbitration statute forFlorida and describes how the statute proposed for passage by the Florida legislaturewould fill that need. Full discussion of any particular phase of arbitration is far beyondits scope.The authors wish to acknowledge their debt to Richard B. Thomas, student in theUniversity of Miami Law School, for his valuable assistance in the preparation of thisarticle.1. FLA. STAT. §§ 57.01-57.07 (1951).2. Vynier's Case, 8 Coke 81b, 77 FEng. Reprint 597, 3 Eng. Rul. Case 371 (1809);People v. Nash, 111 N.Y. 310, 18 N.E. 630 (1888).3. Wynne v. Greenleaf-Johnson Lumber Co., 179 N.C. 320, 102 S.E. 403 (1920).4. For discussion see Park Coast. Co. v. Independent School Dist. No. 32, CarverCounty, 209 Minn. 182, 296 N.W. 475 (1941). "Arbitration can serve as a flexibleand expeditious process, . . . 'free from the myriad technicalities which beset and protractlegislation' . . . for deciding controverted claims. BUT, the arbitral process is liable tojudicial review at many different points, from the agreement right through the hearingand award. If a party becomes recalcitrant as to the performance of his agreement toarbitrate, or if he feels aggrieved by the arbitrator or the opposing party during the courseof the arbitral proceedings, or with respect to the award rendered, his cause is likely tofind its way to lawyers and to the courts. Courts and legislatures are currently dealingwith many of these matters and are making the law which governs the process. As aconsequence, parties, lawyers and arbitrators are well advised to take account of theselegal controls in planning for, and in undertaking the use and practice of, arbitration."WESLEY A. STURCES, CASES ON ARBITRATION, to be published shortly by M. Bender & Co.5. FLA. STAT. § 57.01 (1951); Ogden v. Baile, 73 Fla. 1103, 75 So. 794 (1917).205MIAMI LAW QUARTERLYhave interpreted these statutes to give parties a second method of arbitra.tion, the common law method existing side by side with that of thestatute.Saved from a lingering demise by this statutory help, arbitration foundconvalescence a wearing time. Courts and attorneys had not lost theircommon law antipathy, and judges frequently found omission or mistakein the parties' use of the statutory method.7 Such omission, etc., meantthat at best the arbitration in issue would be a mere common law onewith revocability and the necessity of suit to obtain judgment on the award.8Occasionally at common law future dispute clauses were permitted.0Parties who in their original contract had agreed to submit to arbitrationcontroversies arising under the contract could do so. Such future disputeclauses were not permitted under the nineteenth century variety statutes. 10These clauses did not have an easy time at common law, however, andsome of the noblest legal literature defending the rights of people tocourts was devoted to attacking such clauses."'Obviously, however, arbitration was doomed to perpetual mediocrityunless this phase of its potential, the handling of future disputes, was per-mitted to develop. In 1920 the legislature of the State of New York,influenced by the commercial and business interests of the state, passed thefirst of the modern acts.' 2 Since then our once weak patient has gainedbountiful health within that state. Legislative validation of future disputesclauses has brought modern arbitration to fruition. Today such clauses arecommonplace in commercial contracts, both national and international.The forthcoming establishment of an Inter-American trade center atMiami has pointed up the need of a modem act for Florida. Internationaltraders use future disputes clauses constantly; yet the present Florida statutedoes not provide for them. International traders might find the advantagesof a Florida trade center not too inviting if forced to use the legal machineryof other jurisdictions to dispose of or settle disputes arising out of theircontracts.The draft of the Arbitration Act for Florida herein discussed embodiesthe best features of the modern acts.' Parties may, by a written submissionagreement or by a future disputes clause, agree to arbitrate present or futuredisputes. The dispute need not be of a justiciable character for a valid6. The Washington statute was held to abolish common law arbitration, State ex relFancher v. Everett, 144 Wash. 592, 258 Pac. 486 (1927).7. E.g., Franks v. Battles, 147 Ark. 169, 227 S.W. 32 (1921).8. But see discussion in Park Const. Co. v. Independent School Dist., supra note 4.9. Red Cross Line v. Atlantic Fruit Co., 264 U.S. 109 (1924); Williams v.Branning Mfg. Co., 153 N.C. 7, 68 S.E. 902 (1910).10. Myers v. Jenkins, 63 Ohio St. 101, 57 N.E. 1089 (1900); Baltimore & Ohio R.R.v. Standard, 56 Ohio St. 224, 46 N.E. 577 (1897).11. Baltimore & Ohio R.R. v. Standard, 56 Ohio St. 224, 46 N.E. 577 (1897).12. N.Y. Civ. PRAC. AcT § 84. This act has now been passed in 13 other states.13. The New York Act was the first of the modern acts and has served as a modelfor latter ones. Citations will be made to that act as occasion demands.ROLE OF MODERN ARBITRATIONarbitration.' 4 Labor agreements are specifically included within the termsof the Act: Power is reserved to the parties to specifically provide thattheir arbitration agreement be not subject to the statute, thereby preservingtheir right to common law arbitration. The making of a provision orsubmission for arbitration is deemed a consent to the jurisdiction of thecircuit courts to enforce the agreement or to enter judgment on an awardthereon.15If a dispute arises, arbitration may be initiated by the party demandingarbitration under the statute by serving (personally or by registered mail)a written notice on the other party. Such notice must state that unlesswithin ten days after service the party served shall serve a notice of motionto stay the arbitration, he shall be thereafter barred from putting in issuethe existence or validity of the agreement or the failure to comply therewith.,The court may, upon the parties' application, do what is necessary to pre-serve property or to secure satisfaction of the award.Normally, of course, the parties would proceed without court inter-vention to arbitration. If one party is recalcitrant, however, the other mayseek court aid by applying for an order to proceed to arbitration. Ten daysnotice of such application shall be served upon the recalcitrant party. Ahearing on the motion is held; if the court is then satisfied that there isno substantial issue regarding the existence or validity of the agreement toarbitrate, the court will make an order directing the parties to proceed."7If, however, a substantial issue is raised as to the existence or validityof the agreement, the court shall proceed to trial on the issue. Either partyhas the right to demand jury trial of this issue but such demand must bemade before the return day of the motion to proceed or in the applicationfor a motion to stay arbitration.' Note that the recalcitrant party has twoopportunities to raise questions concerning the existence or validity of theagreement: he may raise the question by a motion to stay arbitration or bycontesting a motion to compel arbitration. He has the right of jury trialon these issues. His failure to exercise the rights at an appropriate time, ofcourse, bars him from raising these questions later in the proceedings.Assuming that the order to proceed has issued, we move to the nextstep, the arbitral proceedings. The arbitrators have been appointed perhapsby the court, (1) if the agreement did not provide a method of appointment,or (2) if the parties had not appointed them within the time prescribed,or (3) if an arbitrator had failed or was unable to act, or (4) if the partieschose two who were to choose a third and the two were unable to agreeon the third. These court appointments must be made on motion, of course,14. Compare N.Y. Civ. PRAC. ACT § 1448; Matter of Fletcher, 237 N.Y. 440, 143N.E. 248 (1924).15. Lehigh Structural Steel Co. v. Rust Engineering Co., 59 F.2d 1038, cert, denied287 U.S. 622 (1932).16. See N.Y. Civ. PRAc. ACT § 1458(2).17. Id. § 1450.18. Id. § 1458(2).MIAMI LAW QUARTERLYwith proper notice being given to the other parties. If the agreement issilent as to the number of arbitrators, the court appoints three. Courtappointed arbitrators have the same power as those appointed under theagreement. 19Among the powers of arbitrators are the following: (1) to appointa time and place for hearing and notify the parties; (2) to adjourn the hear-ing from time to time; (3) to postpone the hearing but not beyond thedate fixed for making the award; (4) to proceed ex parte if any party neglectsto appear after being given reasonable notice of the time and place of thehearing; (5) to require any person to attend as a witness and to bring withhim any book, record, document or other evidence. Subpoenae, when issued,are signed by the arbitrators or a majority of them, and are directed to theperson and served in the same manner as subpoenae to testify before acourt of record. Upon petition of the majority of the arbitrators, the courtmay by its contempt power compel attendance of those persons who fail toobey the subpoenae.2If, after the commencement of the first meeting and before final award,an arbitrator for any reason fails to act as such, a majority of the remainingarbitrators, if there be more than one, may determine any question andrender a final award. The parties may, of course, under the terms of theagreement or by petition to the court, have replacements appointed.During the course of the hearing, the arbitrators may subpoena wit-nesses and admit depositions taken upon proper legal grounds. The conductof the hearing is governed by allowing a party to apply for an order tovacate the award specifying the particular breach of proper conduct in hismotion, from the grounds listed in the statute. 21 The award must be inwriting and signed by a majority of the arbitrators, and immediately uponits rendition, a true copy of the award must be transmitted to each of theparties or their attorneys.22In many cases, the time within which the award shall be made is fixedin the arbitration agreement. If the time has not been fixed, it must bemade within a reasonable time after the close of the proceedings. Thecourt in its order directing the arbitrators to proceed promptly may set thetime deemed to be reasonable. Awards rendered after the reasonable timehave no legal effect, unless, of course, the parties in writing agree to extendthe time or to ratify the award.23Though the validity of an award is not affected by the fact that nomotion is made to confirm it, such a motion may be made by any partywithin one year after the award is made. Five days written notice must be19. Compare id, §§ 1452, 1453.20. See id. § 1456.21. Infra note 24.22. N.Y. CIV. PRAc. ACT § 1460.23. Id. § 1461.ROLE OF MODERN ARBITRATIONserved on the adverse party or his attorney. The court must grant thismotion unless the award is vacated, modified or corrected.A party wishing to have the award vacated, modified or corrected, maymake such a motion and serve notice within three months after a copy ofthe award has been received by the party or his attorney.2 4The grounds for vacating the award are as follows: (a) Where theaward was procured by corruption, fraud or other undue means; (b) wherethere was evident partiality or corruption in the arbitrators or any of them;(c) where the arbitrators were guilty of misconduct, in refusing to postponethe hearing, upon sufficient cause shown, or in refusing to hear evidencepertinent and material to the controversy, or of any other misbehavior, bywhich the rights of any party have been prejudiced; (d) where the arbitratorsexceeded their powers, or so imperfectly executed them that a final and de-finite award upon the subject matter submitted was not made; (e) if therewas no valid submission or arbitration agreement and the proceeding wasinstituted without either serving a notice of intention to arbitrate, as pro-vided in Section 7, or without serving a motion to compel arbitration, asprovided in Section 4, paragraph 2.25The grounds for modification or correction are as follows: (a) Wherethere was an evident miscalculation of figures, or an evident mistake in thedescription of any person, thing or property referred to in the award; (b)where the arbitrators have awarded upon a matter not submitted to themnot affecting the merits of the decision upon the issues submitted; (c) wherethe award is imperfect in a matter of form, not affecting the merits of thecontroversy.20If the court vacates the award it may, in its discretion, direct a rehear-ing before the same arbitrators or new ones, the original agreement governingselection and time of award.Upon the granting of an order, confirming, modifying, correcting orvacating an award, judgment or decree must be entered in conformity there-with. The judgment may be docketed and has the same effect as a judg-ment or decree in action or special proceeding. It may be enforced as ifit had been rendered in an action in a court in which it has been entered.2 7Appeals may be taken from any final order or from a judgment enteredupon an award or from an order or judgment in any action or special pro-ceeding.28Note that though the Act provides for speedy, efficient enforcementof both arbitration agreements and awards, the rights of all parties are fullypreserved. Notice and hearing and trial by jury are carefully spelled out.24. Id. § 1463.25. Id. § 1462.26. Id. § 1463.27. Id. § 1464.28. Id. § 1467.MIAMI LAW QUARTERLYModem arbitration statutes have been declared constitutional whereverenacted .21The passage of a modem arbitration statute such as the one describedherein would greatly aid in the overall industrial growth of Florida througha more efficient functioning of the proposed Inter-American center andthrough the rapid settlement of labor disputes and other important highlytechnical matters more adequately handled in this fashion. It is hoped thatall Florida, the general public, and the bench and bar will soon participate inthe benefits accompanying such statutes.29. Marine Transit Corp. v. Dreyfus, 284 U.S. 263 (1931) (federal statute); Finsilver,Still & Mess v. Goldberg M. & Co., 253 N.Y. 382, 171 N.E. 579 (1930) (New Yorkstatute).

The Role of Modern Arbitration in the Progressive Development of Florida Law

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The Role of Modern Arbitration in the Progressive Development of Florida Law

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