Florida’s Revised Arbitration Code

In 2013, the Florida Arbitration Code was amended and is now known as the “Revised Florida Arbitration Code” (“RFAC”).  RFAC applies to all agreements to arbitrate that were made on or after July 1, 2013.  Arbitration agreements entered into before July 1, 2013, may be subject to RFAC if all parties consent to RFAC’s application.   Beginning July 1, 2016, an agreement to arbitrate, regardless of its date, will be subject to RFAC.  Section 682.013, Florida Statutes (2014).

RFAC applies to agreements to arbitrate where interstate commerce in not implicated; where interstate commerce is implicated, the arbitration proceedings shall be governed by the Federal Arbitration Code.  Additionally, RFAC does not apply to any dispute involving child custody, visitation, or child support.

Before exploring RFAC, it’s important to understand arbitration.   Arbitration is an alternative dispute resolution process where parties submit the dispute to one or more impartial persons for a final and binding decision.  The purpose of using arbitration is for a faster and more economical approach to dispute resolution, as compared to trials.

The discussion of RFAC is broken up by the categories where practitioners and parties may see the most change with respect to the 2013 amendments.

1. The Form of the Arbitration Agreement – What Constitutes an Arbitration Agreement?

FAC required agreements to be in writing, which many interpreted as requiring a paper format.  RFAC contemplates non-traditional forms of arbitration agreements that are crafted by email or that are stored electronically.  For example, an arbitration agreement would be recognized if there were a series of emails between the parties that clearly reflected both party’s intent to utilize arbitration as dispute resolution.  This change was made in light of the fact that much of the communications and business relationships occur through electronic means, and where, more often-than-not, parties either forget to memorialize all the terms of their agreement into one paper document or believe that the exchange of electronic communications was sufficient to constitute their intent to arbitrate.

2. Waiver – What Rights Can Parties Not Waive Through Their Arbitration Agreement?

While an agreement to arbitrate foregoes certain rights, a party cannot waive the right to judicial relief, the right to a provisional remedy, jurisdiction of the courts, the right to appeal, the right to notice, the right to disclosure, or the right to an attorney.  Section 682.014, Florida Statutes (2014). This is a new section from FAC as FAC did not delineate what rights parties were unable to waive.

3. Provisional Remedies- What Rights Do Courts and Arbitrators Have With Respect to Provisional Remedies?

Section 682.031, Florida Statutes (2014), is a new section in RFAC, not previously included in FAC that contains provisional remedies that essentially permit the court to grant an injunction pending arbitration if the party applying for the injunction can satisfy the requirements of a preliminary injunction.   The arbitrator or arbitration panel may grant a provisional remedy if the remedy is necessary to protect the effectiveness of the arbitration proceeding, or in the alternative, if the matter is urgent and the arbitrator cannot act timely, a party to arbitration may still petition the court for a provisional remedy.  Courts retain a de novo review of the arbitrators’ provisional remedy awards for injunctive or equitable relief.  FAC did not include a provision for judicial relief so RFAC essentially expanded the rights parties have with respect to preliminary awards and injunctions.

4. Consolidation of Separate Arbitration Proceedings – What Actions May Be Consolidated to a Single Arbitration Proceeding?

Another new section to RFAC that was not present in FAC is Section 682.033, Florida Statutes (2014).  A party to an arbitration agreement has the ability to ask the court to consolidate separate arbitration proceedings in certain circumstances.  All of the following factors must be present for the court to order consolidation of arbitration: commonality between the parties to the arbitrations; the existence of common issues of law or fact; the claims arise substantially from the same transaction or series of related transactions; and the prejudice resulting from the failure to consolidate is not outweighed by prejudice to the parties opposing the consolidation, including the risk of undue delay or other hardship.

5. Impartiality of Arbitrators – What Disclosures Must Be Made By Arbitrators?

Although not codified previously, the requirement for arbitrators to make certain disclosures has always been the rule in Florida.  Under Section 682.041, Florida Statutes (2014), an arbitrator is required to make a “reasonable inquiry” and to disclose facts that a reasonable person would consider likely to affect the arbitrator’s impartiality, including a financial or personal stake in the outcome of the arbitration and any existing or past relationships with the parties, counsel, representatives of parties, witnesses, or other arbitrators.  The provision imposes an ongoing obligation to disclose any interest or relationships that may affect the appearance of impartiality.  An arbitrator’s failure to make the requisite disclosures could potentially allow a party to vacate an award made by the arbitrator.

6. Summary Disposition of Claims – What Powers Do Arbitrators Have to Summarily Dispose of Claims?

An arbitrator may summarily dispose of claims or issues in an arbitration proceeding.  Section 682.06, Florida Statutes (2014). Before this amendment, dispositive motions were unheard of in the arbitration context.  While some commentators believe this is against the nature of arbitration, this amendment aligns with the principles of faster and inexpensive dispute resolution as the arbitrator may dispose of meritless claims.  Note, just as in the courtroom, there must still be a hearing on any dispositive motion, of which the parties must be provided notice and an opportunity to be heard.

7. Remedies, Fees, and Expenses– What Awards Can Arbitrators Include In Remedies?

Arbitrators may now award punitive damages and sanctions for violations.  Additionally, arbitrators may now award reasonable attorneys’ fees if “such an award is authorized by law in a civil action involving the same claim or by the agreement of the parties to the arbitration proceeding.”  Section 682.11, Florida Statutes (2014).  Once a party received an award in an arbitration proceeding, the party may make a motion with the court to confirm the award.  Section 682.12, Florida Statutes (2014).

In sum, RFAC provides arbitrators with more power, somewhat more similar to the powers of a judge.  However, even with these ground-breaking amendments in mind, RFAC may have little effect on arbitration proceedings as most savvy parties with arbitration agreements include and incorporate procedural and substantive arbitration rules in their agreements.  RFAC exists as a set of default rules that may be applied only if the arbitration agreement does not address the issue.  The only limitations that RFAC does not permit a party to waive through an agreement are those listed in Section 682.014, Florida Statutes, as listed and cited above.  For practitioners and parties alike, RFAC will likely change how you draft certain provisions in arbitration agreements.