SB-0903, As Passed House, November 29, 2012

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 903

A bill to provide for the enforceability of agreements to

arbitrate disputes; to provide procedures for the arbitration of

disputes; to provide remedies, including remedies for the

enforcement of arbitration agreements, rulings, and awards; and to

provide immunity from civil liability and testimonial privileges.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. (1) This act shall be known and may be cited as the

"uniform arbitration act".

(2) As used in this act:

(a) "Arbitration organization" means an association, agency,

board, commission, or other entity that is neutral and initiates,

sponsors, or administers an arbitration proceeding or is involved

in the appointment of an arbitrator.

(b) "Arbitrator" means an individual appointed to render an

award, alone or with others, in a controversy that is subject to an

agreement to arbitrate.

(d) "Knowledge" means actual knowledge.

(e) "Person" means an individual, corporation, business trust,

estate, trust, partnership, limited liability company, association,

joint venture, government; governmental subdivision, agency, or

instrumentality; public corporation; or any other legal or

commercial entity.

(f) "Record" means information that is inscribed on a tangible

medium or that is stored in an electronic or other medium and is

retrievable in perceivable form.

Sec. 2. (1) Except as otherwise provided in this act, a person

gives notice to another person by taking action that is reasonably

necessary to inform the other person in ordinary course, whether or

not the other person acquires knowledge of the notice.

(2) A person has notice if the person has knowledge of the

notice or has received notice.

(3) A person receives notice when it comes to the person's

attention or the notice is delivered at the person's place of

residence or place of business, or at another location held out by

the person as a place of delivery of such communications.

Sec. 3. (1) On or after July 1, 2013, this act governs an

agreement to arbitrate whenever made.

(2) This act does not apply to an arbitration between members

of a voluntary membership organization if arbitration is required

and administered by the organization. However, a party to such an

arbitration may request a court to enter an order confirming an

arbitration award and the court may confirm the award or vacate the

award for a reason contained in section 23(1)(a), (b), or (d).

Sec. 4. (1) Except as otherwise provided in subsections (2)

and (3), a party to an agreement to arbitrate or to an arbitration

proceeding may waive or the parties may vary the effect of the

requirements of this act to the extent permitted by law.

(2) Before a controversy arises that is subject to an

agreement to arbitrate, a party to the agreement may not do any of

the following:

(a) Waive or agree to vary the effect of the requirements of

section 5(1), 6(1), 8, 17(1) or (2), 26, or 28.

(b) Agree to unreasonably restrict the right under section 9

to notice of the initiation of an arbitration proceeding.

to disclosure of any facts by a neutral arbitrator.

(d) Waive the right under section 16 of a party to an

agreement to arbitrate to be represented by a lawyer at any

proceeding or hearing under this act, but an employer and a labor

organization may waive the right to representation by a lawyer in a

labor arbitration.

(3) A party to an agreement to arbitrate or arbitration

proceeding may not waive, or the parties may not vary the effect

of, the requirements of this section or section 3(1) or (3), 7, 14,

18, 20(4) or (5), 22, 23, 24, 25(1) or (2), 29, 30, or 31.

Sec. 5. (1) Except as otherwise provided in section 28, a

request for judicial relief under this act must be made by motion

to the court and heard in the manner provided by court rule for

making and hearing motions.

(2) Unless a civil action is already pending between the

parties, a complaint regarding the agreement to arbitrate must be

filed and served as in other civil actions. Notice of an initial

motion under this act may be served with the summons and complaint

in the manner provided by court rule for the service of a summons

in a civil action. Otherwise, notice of the motion must be given in

the manner provided by court rule for serving motions in pending

actions.

Sec. 6. (1) An agreement contained in a record to submit to

arbitration any existing or subsequent controversy arising between

the parties to the agreement is valid, enforceable, and irrevocable

except on a ground that exists at law or in equity for the

revocation of a contract.

(2) The court shall decide whether an agreement to arbitrate

exists or a controversy is subject to an agreement to arbitrate.

(3) An arbitrator shall decide whether a condition precedent

to arbitrability has been fulfilled and whether a contract

containing a valid agreement to arbitrate is enforceable.

(4) If a party to a judicial proceeding challenges the

existence of, or claims that a controversy is not subject to, an

agreement to arbitrate, the arbitration proceeding may continue

pending final resolution of the issue by the court, unless the

court otherwise orders.

Sec. 7. (1) On motion of a person showing an agreement to

arbitrate and alleging another person's refusal to arbitrate under

the agreement, the court shall do both of the following:

(a) If the refusing party does not appear or does not oppose

the motion, order the parties to arbitrate.

(b) If the refusing party opposes the motion, proceed

summarily to decide the issue and order the parties to arbitrate

unless it finds that there is no enforceable agreement to

arbitrate.

(2) On motion of a person alleging that an arbitration

proceeding has been initiated or threatened but that there is no

agreement to arbitrate, the court shall proceed summarily to decide

the issue. If the court finds that there is an enforceable

agreement to arbitrate, it shall order the parties to arbitrate.

(3) If the court finds that there is no enforceable agreement,

it shall not order the parties to arbitrate under subsection (1) or

(2).

(4) The court shall not refuse to order arbitration because

the claim subject to arbitration lacks merit or grounds for the

claim have not been established.

(5) If a proceeding involving a claim referable to arbitration

under an alleged agreement to arbitrate is pending in court, a

motion under this section must be made in that court. Otherwise, a

motion under this section may be made in any court as provided in

section 27.

(6) If a party moves the court to order arbitration, the court

on just terms shall stay any judicial proceeding that involves a

claim alleged to be subject to the arbitration until the court

renders a final decision under this section.

(7) If the court orders arbitration, the court on just terms

shall stay any judicial proceeding that involves a claim subject to

the arbitration. If a claim subject to the arbitration is

severable, the court may limit the stay to that claim.

Sec. 8. (1) Before an arbitrator is appointed and is

authorized and able to act, the court, on motion of a party to an

arbitration proceeding and for good cause shown, may enter an order

for provisional remedies to protect the effectiveness of the

arbitration proceeding to the same extent and under the same

conditions as if the controversy were the subject of a civil

action.

(2) After an arbitrator is appointed and is authorized and

able to act, both of the following apply:

(a) The arbitrator may issue orders for provisional remedies,

including interim awards, as the arbitrator finds necessary to

protect the effectiveness of the arbitration proceeding and to

promote the fair and expeditious resolution of the controversy, to

the same extent and under the same conditions as if the controversy

were the subject of a civil action.

(b) A party to an arbitration proceeding may move the court

for a provisional remedy only if the matter is urgent and the

arbitrator is not able to act timely or the arbitrator cannot

provide an adequate remedy.

(3) A party does not waive a right of arbitration by making a

motion under subsection (1) or (2).

Sec. 9. (1) A person initiates an arbitration proceeding by

giving notice in a record to the other parties to the agreement to

arbitrate in the agreed manner between the parties or, in the

absence of agreement, by certified or registered mail, return

receipt requested and obtained, or by service as authorized for the

commencement of a civil action. The notice must describe the nature

of the controversy and the remedy sought.

(2) Unless a person objects for lack or insufficiency of

notice under section 15(3) not later than the beginning of the

arbitration hearing, the person by appearing at the hearing waives

any objection to lack of or insufficiency of notice.

Sec. 10. (1) Except as otherwise provided in subsection (3), on

motion of a party to an agreement to arbitrate or to an arbitration

proceeding, the court may order consolidation of separate

arbitration proceedings as to all or some of the claims if all of

the following apply:

(a) There are separate agreements to arbitrate or separate

arbitration proceedings between the same persons or 1 of them is a

party to a separate agreement to arbitrate or a separate

arbitration proceeding with a third person.

(b) The claims subject to the agreements to arbitrate arise in

substantial part from the same transaction or series of related

transactions.

possibility of conflicting decisions in the separate arbitration

proceedings.

(d) Prejudice resulting from a failure to consolidate is not

outweighed by the risk of undue delay or prejudice to the rights of

or hardship to parties opposing consolidation.

(2) The court may order consolidation of separate arbitration

proceedings as to some claims and allow other claims to be resolved

in separate arbitration proceedings.

(3) The court may not order consolidation of the claims of a

party to an agreement to arbitrate if the agreement prohibits

consolidation.

Sec. 11. (1) If the parties to an agreement to arbitrate agree

on a method for appointing an arbitrator, that method must be

followed, unless the method fails. If the parties have not agreed

on a method, the agreed method fails, or an arbitrator appointed

fails or is unable to act and a successor has not been appointed,

the court, on motion of a party to the arbitration proceeding,

shall appoint the arbitrator. An arbitrator so appointed has all

the powers of an arbitrator designated in the agreement to

arbitrate or an arbitrator appointed by the agreed method.

(2) An individual who has a known, direct, and material

interest in the outcome of the arbitration proceeding or a known,

existing, and substantial relationship with a party shall not serve

as an arbitrator required by an agreement to be neutral.

Sec. 12. (1) Before accepting appointment, an individual who

is requested to serve as an arbitrator, after making a reasonable

inquiry, shall disclose to all parties to the agreement to

arbitrate and arbitration proceeding and to any other arbitrators

any known facts that a reasonable person would consider likely to

affect the impartiality of the arbitrator in the arbitration

proceeding, including both of the following:

(a) A financial or personal interest in the outcome of the

arbitration proceeding.

(b) An existing or past relationship with any of the parties

to the agreement to arbitrate or the arbitration proceeding, their

counsel or representatives, a witness, or another arbitrator.

(2) An arbitrator has a continuing obligation to disclose to

all parties to the agreement to arbitrate and arbitration

proceeding and to any other arbitrators any facts that the

arbitrator learns after accepting appointment that a reasonable

person would consider likely to affect the impartiality of the

arbitrator.

(3) If an arbitrator discloses a fact required by subsection

(1) or (2) to be disclosed and a party timely objects to the

appointment or continued service of the arbitrator based on the

fact disclosed, the objection may be a ground under section

23(1)(b) for vacating an award made by the arbitrator.

(4) If the arbitrator did not disclose a fact as required by

subsection (1) or (2), on timely objection by a party, the court

under section 23(1)(b) may vacate an award.

(5) An arbitrator appointed as a neutral arbitrator who does

not disclose a known, direct, and material interest in the outcome

of the arbitration proceeding or a known, existing, and substantial

relationship with a party is presumed to act with evident

partiality under section 23(1)(b).

(6) If the parties to an arbitration proceeding agree to the

procedures of an arbitration organization or any other procedures

for challenges to arbitrators before an award is made, substantial

compliance with those procedures is a condition precedent to a

motion to vacate an award on that ground under section 23(1)(b).

Sec. 13. If there is more than 1 arbitrator, the powers of an

arbitrator must be exercised by a majority of the arbitrators, but

all of them shall conduct the hearing under section 15(3).

Sec. 14. (1) 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.

(2) The immunity afforded by this section supplements any

immunity under other law.

(3) The failure of an arbitrator to make a disclosure required

by section 12 does not cause any loss of immunity under this

section.

(4) 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 is

subject to both of the following:

(a) This subsection does not apply 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.

(b) This subsection does not apply to a hearing on a motion to

vacate an award under section 23(1)(b) or (c) if the moving party

establishes prima facie that a ground for vacating the award

exists.

(5) 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 (4), 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 fees and other reasonable

expenses of litigation.

Sec. 15. (1) An arbitrator may conduct an arbitration in the

manner that the arbitrator considers appropriate for a fair and

expeditious disposition of the proceeding. The authority conferred

on the arbitrator includes the power to hold conferences with the

parties to the arbitration proceeding before the hearing and, among

other matters, determine the admissibility, relevance, materiality,

and weight of any evidence.

(2) An arbitrator may decide a request for summary disposition

of a claim or particular issue if either of the following applies:

(a) All interested parties agree.

(b) On request of 1 party to the arbitration proceeding if the

party gives notice to all other parties to the proceeding and the

other parties have a reasonable opportunity to respond.

(3) If an arbitrator orders a hearing, the arbitrator shall

set a time and place and give notice of the hearing not less than 5

days before the hearing begins. Unless a party to the arbitration

proceeding makes an objection to lack or insufficiency of notice

not later than the beginning of the hearing, the party's appearance

at the hearing waives the objection. On request of a party to the

arbitration proceeding and for good cause shown, or on the

arbitrator's own initiative, the arbitrator may adjourn the hearing

from time to time as necessary but shall not postpone the hearing

to a time later than that fixed by the agreement to arbitrate for

making the award unless the parties to the arbitration proceeding

consent to a later date. The arbitrator may hear and decide the

controversy on the evidence produced although a party who was duly

notified of the arbitration proceeding did not appear. The court,

on request, may direct the arbitrator to conduct the hearing

promptly and render a timely decision.

(4) At a hearing under subsection (3), a party to the

arbitration proceeding has a right to be heard, to present evidence

material to the controversy, and to cross-examine witnesses

appearing at the hearing.

(5) If an arbitrator ceases or is unable to act during the

arbitration proceeding, a replacement arbitrator must be appointed

in accordance with section 11 to continue the proceeding and to

resolve the controversy.

Sec. 16. A party to an arbitration proceeding may be

represented by a lawyer.

Sec. 17. (1) An arbitrator may issue a subpoena for the

attendance of a witness and for the production of records and other

evidence at any hearing and may administer oaths. A subpoena shall

be served in the manner for service of subpoenas in a civil action

and, on motion to the court by a party to the arbitration

proceeding or the arbitrator, enforced in the manner for

enforcement of subpoenas in a civil action.

(2) To make the proceedings fair, expeditious, and cost

effective, on request of a party to or a witness in an arbitration

proceeding, an arbitrator may permit a deposition of any witness to

be taken for use as evidence at the hearing, including a witness

who cannot be subpoenaed for or is unable to attend a hearing. The

arbitrator shall determine the conditions under which the

deposition is taken.

(3) An arbitrator may permit or limit discovery as the

arbitrator decides appropriate in the circumstances, taking into

account the needs or requirements of the parties to the arbitration

proceeding and other affected persons, the arbitration agreement,

court orders, and the desirability of making the proceeding fair,

expeditious, and cost effective.

(4) If an arbitrator permits discovery under subsection (3),

the arbitrator may order a party to the arbitration proceeding to

comply with the arbitrator's discovery-related orders, issue

subpoenas for the attendance of a witness and for the production of

records and other evidence at a discovery proceeding, and take

action against a noncomplying party to the extent a court could if

the controversy were the subject of a civil action in this state.

(5) An arbitrator may issue a protective order to prevent the

disclosure of privileged information, confidential information,

trade secrets, and other information protected from disclosure to

the extent a court could if the controversy were the subject of a

civil action in this state.

(6) All laws compelling a person under subpoena to testify and

all fees for attending a judicial proceeding, a deposition, or a

discovery proceeding as a witness apply to an arbitration

proceeding as if the controversy were the subject of a civil action

in this state.

(7) The court may enforce a subpoena or discovery-related

order for the attendance of a witness in this state and for the

production of records and other evidence issued by an arbitrator in

connection with an arbitration proceeding in another state on

conditions determined by the court so as to make the arbitration

proceeding fair, expeditious, and cost effective. A subpoena or

discovery-related order issued by an arbitrator in another state

shall be served in the manner provided by law for service of

subpoenas in a civil action in this state and, on motion to the

court by a party to the arbitration proceeding or the arbitrator,

enforced in the manner provided by law for enforcement of subpoenas

in a civil action in this state.

Sec. 18. If an arbitrator makes a preaward ruling in favor of

a party to the arbitration proceeding, the party may request the

arbitrator to incorporate the ruling into an award under section

19. A prevailing party may move the court for an expedited order to

confirm the award under section 22, in which case the court shall

summarily decide the motion. The court shall issue an order to

confirm the award unless the court vacates, modifies, or corrects

the award under section 23 or 24.

Sec. 19. (1) An arbitrator shall make a record of an award. The

record shall be signed or otherwise authenticated by any arbitrator

who concurs with the award. The arbitrator or the arbitration

organization shall give notice of the award, including a copy of

the award, to each party to the arbitration proceeding.

(2) An award must be made within the time specified by the

agreement to arbitrate or, if not specified in the agreement,

within the time ordered by the court. The court may extend or the

parties to the arbitration proceeding may agree in a record to

extend the time. The court or the parties may extend the time

within or after the time specified or ordered. A party waives any

objection that an award was not timely made unless the party gives

notice of the objection to the arbitrator before receiving notice

of the award.

Sec. 20. (1) On motion to an arbitrator by a party to an

arbitration proceeding, the arbitrator may modify or correct an

award on any of the following grounds:

(a) A ground stated in section 24(1)(a) or (c).

(b) Because the arbitrator has not made a final and definite

award on a claim submitted by the parties to the arbitration

proceeding.

(2) A motion under subsection (1) must be made and notice

given to all parties within 20 days after the moving party receives

notice of the award.

(3) A party to the arbitration proceeding must give notice of

any objection to the motion within 10 days after receipt of the

notice.

(4) If a motion to the court is pending under section 22, 23,

or 24, the court may submit the claim to the arbitrator to consider

whether to modify or correct the award for any of the following

grounds:

(a) A ground stated in section 24(1)(a) or (c).

(b) Because the arbitrator has not made a final and definite

award upon a claim submitted by the parties to the arbitration

proceeding.

(5) An award modified or corrected under this section is

subject to sections 19(1), 22, 23, and 24.

Sec. 21. (1) An arbitrator may award punitive damages or other

exemplary relief if such an award is authorized by law in a civil

action involving the same claim and the evidence produced at the

hearing justifies the award under the legal standards otherwise

applicable to the claim.

(2) An arbitrator may award reasonable attorney fees and other

reasonable expenses of arbitration 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.

(3) As to all remedies other than those authorized by

subsections (1) and (2), an arbitrator may order remedies that the

arbitrator considers just and appropriate under the circumstances

of the arbitration proceeding. The fact that such a remedy could

not or would not be granted by the court is not a ground for

refusing to confirm an award under section 22 or for vacating an

award under section 23.

(4) An arbitrator's expenses and fees, and other expenses,

shall be paid as provided in the award.

(5) If an arbitrator awards punitive damages or other

exemplary relief under subsection (1), the arbitrator shall specify

in the award the basis in fact justifying and the basis in law

authorizing the award and state separately the amount of the

punitive damages or other exemplary relief.

Sec. 22. After a party to an arbitration proceeding receives

notice of an award, the party may move the court for an order

confirming the award at which time the court shall issue a

confirming order unless the award is modified or corrected under

section 20 or 24 or is vacated under section 23.

Sec. 23. (1) On motion to the court by a party to an

arbitration proceeding, the court shall vacate an award made in the

arbitration proceeding if any of the following apply:

(a) The award was procured by corruption, fraud, or other

undue means.

(b) There was any of the following:

(i) Evident partiality by an arbitrator appointed as a neutral

arbitrator.

(ii) Corruption by an arbitrator.

(iii) Misconduct by an arbitrator prejudicing the rights of a

party to the arbitration proceeding.

of sufficient cause for postponement, refused to consider evidence

material to the controversy, or otherwise conducted the hearing

contrary to section 15, so as to prejudice substantially the rights

of a party to the arbitration proceeding.

(d) An arbitrator exceeded the arbitrator's powers.

(e) There was no agreement to arbitrate, unless the person

participated in the arbitration proceeding without raising the

objection under section 15(3) not later than the beginning of the

arbitration hearing.

(f) The arbitration was conducted without proper notice of the

initiation of an arbitration as required in section 9 so as to

prejudice substantially the rights of a party to the arbitration

proceeding.

(2) A motion under this section must be filed within 90 days

after the moving party receives notice of the award under section

19 or within 90 days after the moving party receives notice of a

modified or corrected award under section 20, unless the moving

party alleges that the award was procured by corruption, fraud, or

other undue means, in which case the motion must be made within 90

days after the ground is known or by the exercise of reasonable

care would have been known by the moving party.

(3) If the court vacates an award on a ground other than that

set forth in subsection (1)(e), it may order a rehearing. If the

award is vacated on a ground stated in subsection (1)(a) or (b),

the rehearing shall be before a new arbitrator. If the award is

vacated on a ground stated in subsection (1)(c), (d), or (f), the

rehearing may be before the arbitrator who made the award or the

arbitrator's successor. The arbitrator shall render the decision in

the rehearing within the same time as that provided in section

19(2) for an award.

(4) If the court denies a motion to vacate an award, it shall

confirm the award unless a motion to modify or correct the award is

pending.

Sec. 24. (1) On motion made within 90 days after the moving

party receives notice of the award under section 19 or within 90

days after the moving party receives notice of a modified or

corrected award under section 20, the court shall modify or correct

the award if any of the following apply:

(a) There was an evident mathematical miscalculation or an

evident mistake in the description of a person, thing, or property

referred to in the award.

(b) The arbitrator has made an award on a claim not submitted

to the arbitrator and the award may be corrected without affecting

the merits of the decision on the claims submitted.

(2) If a motion made under subsection (1) is granted, the

court shall modify or correct and confirm the award as modified or

corrected. Otherwise, unless a motion to vacate is pending, the

court shall confirm the award.

(3) A motion to modify or correct an award under this section

may be joined with a motion to vacate the award.

Sec. 25. (1) On granting an order confirming, vacating without

directing a rehearing, modifying, or correcting an award, the court

shall enter a judgment that conforms with the order. The judgment

may be recorded, docketed, and enforced as any other judgment in a

civil action.

(2) A court may allow reasonable costs of the motion and

subsequent judicial proceedings.

(3) On request of a prevailing party to a contested judicial

proceeding under section 22, 23, or 24, the court may add

reasonable attorney fees and other reasonable expenses of

litigation incurred in a judicial proceeding after the award is

made to a judgment confirming, vacating without directing a

rehearing, modifying, or correcting an award.

Sec. 26. (1) A court of this state that has jurisdiction over

the controversy and the parties may enforce an agreement to

arbitrate.

(2) An agreement to arbitrate that provides for arbitration in

this state confers exclusive jurisdiction on the court to enter

judgment on an award under this act.

Sec. 27. A motion under section 5 shall be made in the court

of the county in which the agreement to arbitrate specifies the

arbitration hearing is to be held or, if the hearing has been held,

in the court of the county in which it was held. Otherwise, the

motion may be made in the court of any county in which an adverse

party resides or has a place of business or, if no adverse party

has a residence or place of business in this state, in the court of

any county in this state. All subsequent motions shall be made in

the court that heard the initial motion unless the court otherwise

directs.

Sec. 28. (1) An appeal may be taken from any of the following:

(a) An order denying a motion to compel arbitration.

(b) An order granting a motion to stay arbitration.

(d) An order modifying or correcting an award.

(e) An order vacating an award without directing a rehearing.

(f) A final judgment entered under this act.

(2) An appeal under this section shall be taken as from an

order or a judgment in a civil action.

Sec. 29. In applying and construing this uniform act,

consideration shall be given to the need to promote uniformity of

the law with respect to its subject matter among states that enact

it.

Sec. 30. The provisions of this act that govern the legal

effect, validity, and enforceability of electronic records or

electronic signatures, and of contracts performed with the use of

such records or signatures conform to the requirements of section

102 of the electronic signatures in global and national commerce

act, 15 USC 7002.

Sec. 31. This act takes effect on July 1, 2013.

Sec. 33. This act does not affect an action or proceeding

commenced or right accrued before this act takes effect.

Enacting section 1. This act does not take effect unless all

of the following bills of the 96th Legislature are enacted into

law:

(a) Senate Bill No. 901.