Charles F. Forer is a member in the Philadelphia office of Eckert Seamans Cherin & Mellott, LLC, where he is engaged in all types of Alternative Dispute Resolution.  He is a former co-chair of the Philadelphia Bar Association's Alternate Dispute Resolution Committee, and he is a frequent lecturer and writer on the use of ADR in a variety of settings. He can be reached at 215.851.8406, and by email at cforer@eckertseamans.com.

Robert hit a roadblock in his last arbitration proceeding.  Representing a bank, Robert duly served the arbitration demand on the bank’s high-net-worth borrower who owed more than $600,000.00; presented all of his evidence at the arbitration hearing at which the borrower was a no show; and received the expected arbitration award for the full amount of the bank’s demand.  However, the Court denied the bank’s petition to confirm the arbitration award.  Apparent reason for the Court’s decision: under Pennsylvania law, the Court – not the arbitrator – determines the threshold issue of whether the parties agreed to arbitrate their dispute. 

The Court’s refusal to confirm the bank’s arbitration award is not only bad news for Robert’s bank client.  It also is bad news for the bank‘s other arbitration matters in which the respondents likewise have flouted the arbitration proceeding by refusing to participate.

Come to think of it, the Court’s refusal is bad news for any party that seeks to prosecute its claims in an arbitration proceeding in which the other side refuses to participate.  Robert does not yet realize it, but his bank client now will have to do the following in order to obtain a judgment against its borrower:

• file its initial arbitration demand;
• serve the demand;
• obtain an apparent “award” in the arbitration proceeding;
• strike out in Court in seeking to confirm the arbitration award;
• file a lawsuit in order to obtain an order compelling arbitration;
• go back to arbitration and re-file the arbitration demand;
• serve the new arbitration demand;
• get yet another ex parte arbitration award; and
• obtain – finally! – a Court order that confirms the arbitration award and enters judgment in favor of the bank.

It is no exaggeration to say that if Robert has any more tortuous matters like this, his arbitration clients are going to have second thoughts about arbitration.

Must Robert’s clients go through this lengthy, expensive and multi-step process in order to obtain a judgment against a respondent who refuses to participate in the arbitration?  Is there any way to escape this morass?  Here are some things that Robert should suggest when he has the courage to call up his bank client:

1. Draft the arbitration provision differently.  Arbitration is a matter of contract.  Courts respect the contracts that the parties make.  In initially drafting the arbitration clause, therefore, the parties should say that the arbitrator decides the issue of arbitrability. 

In First Options, Inc. v. Kaplan, 514 U.S. 938 (1995), the United States Supreme Court held that "courts should not assume that the parties agreed to arbitrate arbitrability unless there is 'clear and unmistakable' evidence that they did so."  At least under federal law, therefore, (a) the language of the arbitration agreement determines whether the parties have agreed to submit the arbitrability question to arbitration; and (b) the parties accordingly should clearly provide that the arbitrator – and not the Court – decides whether the parties have agreed to arbitrate their dispute. 

For instance, the