Arbitration|Conflict Resolution|Mediation|United States

ADR Regulation Proposals Before the US Congress

At a recent meeting of the Council of the ABA Dispute Resolution Section, R. Larson Frisby of the ABA Governmental Affairs Office gave a very useful summary of certain legislation currently before Congress that could have an impact on arbitration, mediation and other forms of ADR in the U.S.  With his kind permission I note some of his report here.


Dodd-Frank:  The Wall Street Reform and Consumer Protection Act, signed into law in July 2010, authorizes the Securities and Exchange Commission to issue rules prohibiting or regulating the arbitration of investor disputes involving securities.  However, it requires the Consumer Financial Protection Bureau to study the use of pre-dispute arbitration practices in consumer cases.  In April 2013, 37 Democratic Senators sent a letter to the SEC urging that mandatory arbitration of securities disputes be prohibited, but at this time there is little indication that much fundamental change will happen in the near future.  By contrast, the CFPB released in December 2013 “Arbitration Study Preliminary Results” whose “nature and tone” have led many commentators to predict that CFPB may eventually propose rules that preserve the right of consumers to participate in class action arbitrations or require opt-out provisions in pre-dispute consumer “agreements.”

Arbitration Fairness Act:  This bill (H.R. 1844 and S. 878), which would invalidate all pre-dispute arbitration agreements involving employment, consumer, antitrust or civil rights claims, has been floating around for many Congressional Sessions.  The current version proposes amendments to the Federal Arbitration Act and excludes from its scope franchise disputes.  It is not expected to advance.

Securities Arbitration:  A bill (H.R. 2998) has been introduced that would discourage the use of arbitration to resolve securities or investment disputes by amending the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940.  It was referred to the House Financial Services Committee and no further action has been taken.

Labor and Employment:  By contrast to the various arbitration bills seeking to restrict the practice, H.R. 169 would require mediation of issues between an employer and a newly-certified employee representative in the event of initial impasse; if the mediation is unsuccessful they would transfer the matter to FMCS for mandatory and binding arbitration.  A proposed amendment to an immigration law would mandate mediation as a condition precedent to a guest worker’s filing a claim against an employer for damages.  Neither bill is expected to advance.

Ombudsman Legislation:  Proposals have been advanced for the creation of an Ombudsman for Immigration Related Concerns (S. 744 and H.R. 15); a Federal Financial Institutions Examination Council Ombudsman (H.R. 1553); a Federal Air Marshall Service Ombudsman (H.R. 64); a Transportation Security Administration Ombudsman (H.R. 84); and a State Home Care Ombudsman (S. 998).  With the exception of S. 744, none of these bills is progressing and no further action has been taken.

Copies of the legislation identified above can be obtained by clicking here.

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