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As reported by the Pittsburgh Post-Gazette, Pennsylvania is considering a bill to reorganize arbitration law in the state.
The bill has the support of the Pennsylvania Bar Association but is opposed by the Pennsylvania Association for Justice, the trial lawyer lobbying group.
As I explain in my recent Heritage Backgrounder, “Why Congress and the Courts Must Respect Citizens’ Rights to Arbitration,” arbitration is a private dispute resolution mechanism that helps keep litigation costs down and benefits businesses and consumers in many ways. However, keeping litigation costs down is exactly why trial lawyer lobbying groups try to limit citizens’ arbitration rights at every opportunity.
The Pennsylvania bill is part of a nationwide uniform arbitration act initiative encouraging states to pass the Uniform Arbitration Act (UAA) developed by the Uniform Law Commissioners, a nonprofit organization that seeks to develop uniform statutes among the states.
To date, 16 states have adopted the UAA, and four more states are considering it: Florida, West Virginia, Massachusetts, and Pennsylvania.
The bill under consideration in Pennsylvania has one particularly market-friendly provision: It allows a court, when ordering compliance with an arbitration award or vacating an improper arbitration award, to require the payment of attorneys’ fees and litigation costs to a prevailing party.
This “loser pays” system is a way to ensure that when a neutral, professional arbitrator awards a judgment, the loser cannot simply ignore the judgment or engage in frivolous lawsuits against the winner. If the loser does so, he risks having to bear all the costs.
This provision would ensure that the judgments of arbitrators are respected in state courts in Pennsylvania, and it certainly mirrors the “strong federal policy” in favor of arbitration appropriately enshrined in the Federal Arbitration Act of 1925 and reiterated by the Supreme Court of the United States in several cases over the past few years. As I argued in my Backgrounder, Congress, states, administrative agencies, and the courts should all respect this strong federal policy and protect citizens’ arbitration rights.
