Revised Uniform Arbitration Act, Section 14
Section 14. Immunity of the Arbitrator; Competency to Testify; Attorney’s Fees and Costs.
(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.
Comment:
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.