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(a) An arbitrator or an arbitration organization
acting in that capacity is immune from civil liability to the same
extent as a judge of a court of this State acting in a judicial
capacity.
(b) The immunity afforded by this section supplements
any immunity under other law.
(c) The failure of an arbitrator to make a disclosure
required by Section 12 does not cause any loss of immunity under
this section.
(d) In a judicial, administrative, or similar proceeding,
an arbitrator or representative of an arbitration organization is
not competent to testify, and may not be required to produce records
as to any statement, conduct, decision, or ruling occurring during
the arbitration proceeding, to the same extent as a judge of a court
of this State acting in a judicial capacity. This subsection does
not apply:
(1) to the extent necessary to determine the
claim of an arbitrator, arbitration organization, or representative
of the arbitration organization against a party to the arbitration
proceeding; or
(2) to a hearing on a [motion] to vacate an award
under Section 23(a)(1) or (2) if the [movant] establishes prima
facie that a ground for vacating the award exists.
(e) If a person commences a civil action against
an arbitrator, arbitration organization, or representative of an
arbitration organization arising from the services of the arbitrator,
organization, or representative or if a person seeks to compel an
arbitrator or a representative of an arbitration organization to
testify or produce records in violation of subsection (d), and the
court decides that the arbitrator, arbitration organization, or
representative of an arbitration organization is immune from civil
liability or that the arbitrator or representative of the organization
is not competent to testify, the court shall award to the arbitrator,
organization, or representative reasonable attorney=s fees and other
reasonable expenses of litigation.
1. Section 14(a) regarding an arbitrator's immunity
is based on the language of former section 1280.1 of the California
Code of Civil Procedure establishing immunity for arbitrators. Section
1280.1 was enacted with an expiration date and was not renewed.
See also Cal. Civ. Proc. Code § 1297.119 which gives the same
protection to arbitrators in international arbitrations and unlike
§ 1280.1 has no expiration date and is still in effect. Three
other states presently provide some form of arbitral immunity in
their arbitration statutes. Fla. Stat. Ann. § 44.107 (West
1995); N.C. Gen. Stat. § 7A-37.1 (1995); Utah Code Ann. §
78-31b-4 (1994).
Arbitral immunity has its origins in common law
judicial immunity; most jurisdictions track the common law directly.
The key to this identity is the "functional comparability"
of the role of arbitrators and judges. See Butz v. Economou, 438
U.S. 478, 511-12 (1978) (establishing the principle that the extension
of judicial-like immunity to non-judicial officials is properly
based on the "functional comparability" of the individual's
acts and judgments to the acts and judgments of judges); see also
Corey v. New York Stock Exch., 691 F.2d 1205, 1209 (6th Cir. 1982)
(applying the "functional comparability" standard for
immunity); Antoine v. Byers & Anderson, Inc., 508 U.S. 429,
435-36 (1993) (holding that the key to the extension of judicial
immunity to non-judicial officials is the "performance of the
function of resolving disputes between parties or of authoritatively
adjudicating private rights").
In addition to the grant of immunity from a civil
action, arbitrators are also generally accorded immunity from process
when subpoenaed or summoned to testify in a judicial proceeding
in a case arising from their service as arbitrator. See, e.g., Andros
Compania Maritima v. Marc Rich, 579 F.2d 691 (2d Cir. 1978); Gramling
v. Food Mach. & Chem. Corp., 151 F. Supp. 853 (W.D. S.C. 1957).
This full immunity from any civil proceedings is what is intended
by the language in section 14(a).
2. Section 14(a) also provides the same immunity
as is provided to an arbitrator to an arbitration organization.
Extension of judicial immunity to those arbitration organizations
is appropriate to the extent that they are acting "in certain
roles and with certain responsibilities" that are comparable
to those of a judge. Corey v. New York Stock Exch., 691 F.2d 1205,
1209 (6th Cir. 1982). This immunity to neutral arbitration organizations
is appropriate because the duties that they perform in administering
the arbitration process are the functional equivalent of the roles
and responsibilities of judges administering the adjudication process
in a court of law. There is substantial precedent for this conclusion.
See, e.g., New England Cleaning Serv., Inc. v. American Arbitration
Ass'n, 199 F.3d 542 (1st Cir. 1999); Honn v. National Ass'n of Sec.
Dealers, Inc., 182 F.3d 1014 (8th Cir. 1999); Hawkins v. National
Ass'n of Sec. Dealers, Inc., 149 F.3d 330 (5th Cir. 1998); Olson
v. National Ass'n of Sec. Dealers, Inc., 85 F.3d 381 (8th Cir. 1996);
Aerojet-General Corp. v. American Arbitration Ass'n, 478 F.2d 248
(9th Cir. 1973); Cort v. American Arbitration Ass'n, 795 F. Supp.
970 (N.D. Cal. 1992); Boraks v. American Arbitration Ass'n, 205
Mich.App. 149, 517 N.W.2d 771 (1994); Candor v. American Arbitration
Ass'n, 97 Misc. 2d 267, 411 N.Y.S.2d 162 (Sup. Ct., Tioga Cty. 1978).
3. Section 14(b) makes clear that the statutory
grant of immunity is intended to supplement, and not diminish, the
immunity granted arbitrators and neutral arbitration organizations
under any judicial, statutory or other law.
4. Section 14(c) is included to insure that, if
an arbitrator fails to make a disclosure required by section 12,
then the typical remedy is vacatur under section 23 and not loss
of arbitral immunity under section 14. Such a result is similar
to the effect of judicial immunity.
5. Section 14(d) is based on the California Evidence
Code, which provides that arbitrators shall not be "competent
to testify * * * as to any statement, conduct, decision, or ruling
occurring at or in conjunction with the prior proceeding."
Cal. Evid. Code § 703.5. New York and New Jersey have adopted
similar provisions that prohibit anyone from calling an arbitrator
as a witness in a subsequent proceeding. N.J.R. Super. Ct. R. 4:21A-4;
N.Y. Ct. R. § 28.12. Consistent with the protections afforded
judges, section 14(d) is intended to protect an arbitrator or a
representative of an arbitration organization from being required
to testify or produce records from an arbitration proceeding in
any civil action, administrative proceeding, or related matter.
However, if the law of a given state would require a judge to testify
in a proceeding for strong public-policy reasons, such as involvement
in a criminal matter, an arbitrator or representative of an arbitration
organization would likewise be required to testify.
An exception is made in section 14(d)(1) for situations
such as when an arbitrator, arbitration organization, or representative
of an arbitration organization asserts a claim against a party to
the arbitration proceeding. For instance, an arbitrator may bring
an action against one of the parties for nonpayment of fees to the
arbitrator and may have to give testimony in order to recover. If,
in an action by the arbitrator to recover a fee, the other party
files a counterclaim against the arbitrator attacking the award,
this section is intended to allow the arbitrator to testify as to
the arbitrator's claim, but the arbitrator cannot be required to
testify or produce records as to the party's counterclaim attacking
the merits of the award. Otherwise the party can circumvent the
general rule against requiring an arbitrator to provide testimony
by forcing an action by the arbitrator by, for instance, not paying
a contractually required fee for the arbitrator's services.
Section 14(d)(2) recognizes that arbitrators who
have engaged in corruption, fraud, partiality or other misconduct
that are grounds to vacate an award under sections 23(a)(1) and
(2) may be required to give testimony so that a party will have
evidence to prove such grounds. Such testimony or records from an
arbitrator are only required after the objecting party makes a sufficient
initial showing that such grounds exist. See Carolina-Virginia Fashion
Exhibitors Inc. v. Gunter, 291 N.C. 208, 230 S.E.2d 380, 388 (1976)
(holding that where there is objective basis to believe that arbitrator
misconduct has occurred, deposition of the arbitrator may be permitted
and the deposition admitted in action for vacatur). A party's allegation
of these grounds without a showing of independent, objective evidence
should be insufficient to require an arbitrator to testify or produce
records from the arbitration proceeding.
6. Section 14(e) is intended to promote arbitral
immunity. By definition, almost all suits against arbitrators, arbitration
organizations, or representatives of an arbitration organization
arising out of the good-faith discharge of arbitral powers are frivolous
because of the breadth of their respective immunity. Spurious lawsuits
against arbitrators, arbitration organizations, and representatives
of an arbitration organization or involvement in collateral judicial
or administrative proceedings deter individuals and entities from
serving in such capacities and thereby harm the arbitration process
because of the costs involved in defending even frivolous actions.
Parties considering such litigation should be discouraged by the
prospect of paying the litigation expenses of the arbitrator, arbitration
organizations, or representatives of an arbitration organization.
When they are not, the statute enables the arbitrators, arbitration
organizations, or representatives of an arbitration organization
to recover their litigation expenses and not to lose their fee and
incur other expenses in the defense of a frivolous lawsuit. The
terms Aother reasonable expenses of litigation@ are intended to
include both actions at the trial-court level and on appeal.
7. In Section 14(d)(2) only a "party"to
the arbitration proceeding would file a motion to vacate under section
23(a)(1) or (2). However, the term "person" is used in
section 14(e) because a third party, i.e., a person who is not party
to the arbitration agreement or the arbitration proceeding, might
bring an action against an arbitrator. For instance, in multiple
arbitration proceedings with subcontractors filing separate arbitration
claims against general contractor X, Arbitrator A may make an award
in a case between general contractor X and subcontractor Y. In a
later arbitration proceeding between general contractor X and subcontractor
Z before Arbitrator B, Z may attempt to subpoena testimony or records
from Arbitrator A in the prior proceeding. Another possible scenario
occurs when Arbitrator A issues a subpoena to T, a third party,
and T decides to bring an action against Arbitrator A. In these
instances, Arbitrator A should be able to assert arbitral immunity
and recover costs and attorney's fees under section 14(e) against
Z or T who would be "persons" but not necessarily "parties"
to the arbitration proceeding between X and Y.
8. Section 14 does not grant arbitrators or arbitration
organizations immunity from criminal liability arising from their
conduct in their arbitral or administrative roles. This comports
with the sparse common law addressing arbitral immunity from criminal
liability. See, e.g., Cahn v. ILGWU, 311 F.2d 113, 114-15 (3d Cir.
1962); Babylon Milk & Cream Co. v. Horowitz, 151 N.Y.S.2d 221
(N.Y. Sup. Ct. 1956).
The provision also draws no distinction between
neutral arbitrators and advocate arbitrators. Both types of arbitrators
are covered by this provision.
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