I actually enjoyed Professor Rau’s
article a great deal, because I feel like he took the ideas that we’ve been
bouncing around in class (especially regarding our negative feelings towards Stolt-Neilsen, Concepcion, and Rent-A-Center) and restated them in a
more academic way, with more supporting documentation. It’s nice to know that
the academic community at large agrees that the Supreme Court has dug itself
into a confusing hole (or maybe found itself trapped in a maze) regarding
arbitration precedent.
I think the most interesting
argument that Professor Rau made was about the holding regarding “silence” in Stolt-Neilsen. I had never considered
this decision from the perspective of general contract interpretation—and now
that the article stated such an argument, I now feel even more strongly that
this decision was a mistake. The argument is this: in contract disputes, judges
often have to make determinations about contract construction in order to fill
the “gaps” in the contract that led to the disagreement in the first place. In
determining what the intentions of the parties were, or in trying to fill the
gaps, however, the judges often end up interpreting the contract. And this is
OK, because that’s how our system has always operated. The Court in Stolt-Neilsen, on the other hand,
decided that an arbitration panel can only decide questions of construction,
not interpretation, because to do the latter is to “impose its own conception
of sound policy”. Professor Rau argues that this was an unnatural limit to place
on arbitral power, because no contract reader only makes decisions on
construction without any interpretation.
I know we’re supposed to be
critical of this article, but I couldn’t find something that I really disagreed
with (feel free to comment if you found something particularly terrible that I
totally missed). I almost wish that we had read this article earlier in the
semester, actually, because I think that it gave me a new way to look at cases that
conceptually fits with what I’ve learned in other classes (coincidentally, that
includes Contracts with Professor Rau). Professor Bayer told us to never forget
that arbitration is a contractual agreement, but I definitely needed this
article to remind me that basic contract principles apply to arbitration agreements,
too.
This was an interesting point and left me wondering if Courts/Judges are allowed to impose their own conceptions of sound policy why can’t the arbitrator(s), agreed upon by the parties, do the same? I haven’t found any compelling justification for the difference.
ReplyDeleteI agree a lot with Professor Rau's focus on the party's contractual agreement. I think a lot of the problems that have been encountered are either because the Supreme Court (and than other courts actually interpreting what the Supreme Court has said) focus too much on making a new judicial policy regarding arbitration OR skew basic contract principles. It is probably too late to backtrack now, but it would be interesting to see how arbitration works on a large scale based only on (relatively) settled contract principles.
ReplyDeleteAgreed with Ben. I liked Rau's article also, and similarly enjoyed how he was able to make our ideas sound polished and plausible. The focus on the contractual agreement is definitely important, but I do think it is important to consider other factors, like the bargaining power between parties, and how well each party understands the contract. I think the real problem arises when one of the parties privy to the contract doesn't understand what's going on, and that's when we see the litigation that we see.
ReplyDeleteI completely agree and found the same points very compelling. The Court's rationale appears bizarre and as such, loses credibility with its audience. As we have seen and discussed, arbitrators may use any and all tools available to them, but "gut-instincts" about fairness to black-letter law. To distinguish the class-arbitration scenario from all others is not well justified.
ReplyDeleteI was actually looking at the UCC gap-filling provisions and rules of construction that we learned in Rau's contracts class. I find it odd that courts can make policy decisions on questions of first impression or interpret contracts but the Supreme Court said that arbitrators couldn't do the same thing. This case seems to go against everything we learned in arbitrations.
ReplyDeleteI had the same problem early on-- thinking about arbitration without realizing that it had anything to do with basic contract law. This article was helpful, and I think he makes a good argument except that there is a clear difference between judges and arbitrators, as well as the finality of their decisions.
ReplyDeleteIt's interesting that the Court decides to make such a clear distinction between judges and arbitrators in light of their other decisions. I'm having trouble understanding the reasoning behind it as well.
ReplyDeleteYo, Meera, this is why I loved your previous post on Stolt-Nielsen so much. You singled out the one point that I think most of us were too timid to admit. Really, what is it about making a policy decision that is so antithetical to arbitrating? Isn't that what arbitration is supposed to be all about? Isn't making decisions based on the fairness instead of the law what we learned arbitration was at the beginning of this course?
ReplyDeleteI think it was in Rau's article where he said the construction/interpretation distinction doesn't really make any sense in the court's opinions. But it leaves him to wonder, much like all of us, what tools are left to the arbitrator in determining an issue where the contract is silent? His concerns that the toolbox may be empty, and the decisional power of the arbitrator are too-cabined will hopefully push the Court to soon tell us what an arbitrator can and can't use, clearly delineated.... ah, that's probably asking too much.
ReplyDelete