Litigation - Arbitration of Environmental Claims - From Agreement to Award

3/26/1997

Introduction
 
Definition
Arbitration is a process whereby a dispute is submitted to one or more impartial persons for a final and binding determination.  Arbitration is not the same as mediation.  Mediation is a process whereby a person, the mediator, tries to help parties reach a settlement of their disputes.
 
Brief History
 
Arbitration is older than litigation.  “Long before law was established, or courts were organized, or judges had formulated principles of law,” man had resorted to arbitration for resolving disputes.  1996 Construction Industry Arbitrator Training Manual, American Arbitration Association (“AAA Manual”).  In fact, between 500 B.C. and 300 B.C., Greek city-states used arbitration extensively to settle a wide variety of disputes.  AAA Manual (Citing 1 Arbitration in Action, Nos. 4-5 at p. 5 (April-May 1943)).  The jury system itself developed as an outgrowth of the arbitral concept.  AAA Manual (citing 16 The Arbitration Journal 4 at p. 193 (1961)).
 
In 1609, however, arbitration was dealt a serious blow by Lord Edward Coke.  Lord Coke held that arbitrators’ decisions could be unilaterally revoked by any party to the arbitration.  The reason for the refusal by courts to enforce arbitration agreements stems from the fight among English courts for jurisdiction - “all of them being opposed to anything that would altogether deprive every one of them of jurisdiction.”  Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (citing authorities).  Lord Coke’s doctrine prevailed for almost 250 years until, in 1855, Lord Cranworth declared that the doctrine of unilateral revocability was “an inconvenient . . . irrational . . . and absurd state of the law.”  AAA Manual (citing Cohen, Commercial Arbitration and the Law).
 
In 1920, New York enacted the first modern arbitration statute.  Five years later, the Federal Arbitration Act (“FAA”) was passed, making arbitration agreements enforceable in federal courts and changing the anti-arbitration rule.  A copy of the FAA is attached at part A of Section VII.  Today, both Texas and Louisiana have general arbitration statutes.  The Texas General Arbitration Act, Tex. Civ. Prac. & Rem. Code § 171, et seq., and the Louisiana Arbitration Law, La. Rev. St. 9:4201, et seq.  A Uniform Arbitration Act has also been adopted in a number of states.  Arbitration statutes abrogate the common law rule prohibiting the enforcement of executory arbitration agreements (agreements to arbitrate disputes that arise in the future).
 
Today, arbitration is strongly favored.  First Options of Chicago, Inc. v. Kaplan, ___ U.S. ___, 115 S.Ct. 1920, 131 L.Ed. 2d 985 (1995); Prudential Securities, Inc. v. Marshall, 309 S.W.2d 896, 899 (Tex. 1995).

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