At the national level, arbitration agreements continue to be a hot button issue, as consumers persistently challenge the validity of those clauses in court. Meanwhile, on the local level, states continue to adopt arbitration legislation aimed at preserving arbitration as a valuable alternative to protracted and costly litigation. Given that the Federal Arbitration Act (“FAA”) preempts much of state law on the subject of arbitration, it seems curious that states would expend legislative resources enacting arbitration laws. However, state law applies to aspects of arbitration that are not addressed by the FAA and in situations where the parties have agreed that the arbitration will be governed by state law.
The National Conference of Commissioners on Uniform State Laws (NCCUSL) adopted the Uniform Arbitration Act (UAA) in 1956 with the goal of promoting the use of arbitration and ensuring the enforceability of arbitration clauses. When the UAA proved unable to address many of the complexities of modern arbitration, and was rendered less effective by the enactment of the Federal Arbitration Act (FAA), NCCUSL adopted a revised version of the UAA. The Revised Uniform Arbitration Act (RUAA), adopted by NCCUSL in 2000, attempts to address the myriad issues that have arisen as arbitration evolves into a more sophisticated and complex process, including who decides the arbitrability of disputes and by what criteria, how a party can initiate an arbitration proceeding, and whether arbitration proceedings may be consolidated. The RUAA also attempts to respond to the enactment of the FAA by addressing issues that are not covered by the FAA in order to carve out as much state jurisdiction as possible on the subject of arbitration and to avoid preemption.
Thirteen states and the District of Columbia have enacted the RUAA since its adoption by NCCUSL. This year, Arizona (2010 AZ HB 2430) and Minnesota (2009 MN HB 1692) enacted the RUAA, and bills proposing the RUAA are currently pending in Alabama (2010 AL HB 20), Massachusetts (2009 MA HB 91) and Pennsylvania (2009 HB 1956).
In contrast, Maine has enacted legislation that will limit arbitration. 2009 ME HB 875, enacted March 31, 2010, and effective on July 21, 2010, provides that “[a] consumer arbitration agreement not allowed under federal law is void and unenforceable.” Therefore, to the extent that a creditor is not able to rely on the FAA, arbitration agreements will soon become unenforceable in Maine.