Legislature(1997 - 1998)
05/05/1998 01:10 PM House JUD
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
CSSB 319(RLS) - ARBITRATION Number 2328 CHAIRMAN GREEN announced the committee would hear CSSB 319(RLS) "An Act relating to arbitration; amending Rules 57(a) and 77(g), Alaska Rules of Civil Procedure; and providing for an effective date." JERRY BURNETT, Legislative Assistant to Randy Phillips, Alaska State Legislature, stated that SB 319 requires that in a contract subject to arbitration language explaining the implications of arbitration is typed in capitol letters within in the arbitration agreement or on a separate document. This language will state clearly that a party to arbitration may be limiting or waiving rights to other remedies, including appeal of an arbitrator's decision to a court of law. He stated that the CSSB 319 (RLS) clarifies provisions that exclude labor management agreements unless the parties agree that they want to include an arbitration clause. It also adds that these provisions do not apply to personal injury claims, very small claims where the total consideration, not the amount to be arbitrated, is less than the small claims amount and insurance claims or annuity contracts. Number 2370 CHAIRMAN GREEN asked if he would explain why the Senator Phillips feels it is necessary to have it in large type. MR. BURNETT stated that the number of contracts commonly in use, including the Anchorage multiple listing service contract for the (indisc.) residents in Alaska, contain a provision that call for arbitration of disputes that arise under the contract. He stated that consumers who have signed these contracts, not knowing what their rights are and then have found themselves in a arbitration situations. He stated that there are no real rules prescribing who can be an arbitrator and if they have to follow Alaska law. He stated that people have unknowingly signed the contract and then wound up in an adverse situation with large attorney fees and no appeal to the courts. He stated that this law is modeled after a Montana Statute. Senator Phillips felt that it was necessary that consumers know what arbitration is and what rights they are giving up. Number 2450 REPRESENTATIVE PORTER asked what right are we giving up under arbitration. Number 2457 MR. BURNETT replied that they give up the right to appeal by signing a contract with an arbitration clause. Also they may be giving up the right to have a conflict resolved in a court of law. TAPE 98-84, SIDE B Number 0001 MR. BURNETT stated that it is listed in the bill page 2, line 31 through page 3, line 22. He stated that this is a list of the rights one may be giving up. He stated that the bill requires that the notice be read, it does not require that a person sign an arbitration agreement or that they waive their right to arbitration. CHAIRMAN GREEN asked if there are very many people who go to arbitration without a lawyer. Number 0060 MR. BURNETT stated that he imagined that there are but he could not speak to that. CHAIRMAN GREEN stated that the would assume that if one hired a lawyer they would be aware of all these issues and that this bill would be to protect the public who might what to do this without an attorney. Number 0082 MR. BURNETT stated that it is more to protect the public when they sign the original contract for the purchase of a home or the purchase of something else when it contains an arbitration clause, giving away their right to go to court. Number 0097 REPRESENTATIVE BERKOWITZ asked if the American Arbitration Association provided their opinion on this bill. MR. BURNETT replied not to his knowledge, although he believes they have heard of it. Number 0112 REPRESENTATIVE PORTER referred to page 2, line 8, and stated that it may not be the intent but it reads that "in order for an agreement to provide for arbitration, the agreement must contain a notice that states that the party has the option to compel arbitration to bind the other party to the arbitration decision and the arbitration limits the right and remedies otherwise under the law." He stated referred to the word "must" and stated it could be interrupted that the party who wishes to arbitrate must do it the way that it is stated. Number 0153 MR. BURNETT replied that he could not speak to that and unfortunately Bill McNall is not present, as he is the attorney that worked on it. He stated that the bill was reviewed by the and assistant Alaska attorney general and believes that it is an accurate statement. Number 0168 REPRESENTATIVE BERKOWITZ stated that it may be accurate but there is a huge internal inconsistency. He referred to lines 12-14, page 2 "parties to an arbitration agreement do not waive their rights to obtain a judicial determination." He stated and then the bill states that you will or may be limiting a dispute resolved in a court of law .... MR. BURNETT stated that if you read line 26, page 2 it states that you do not waive your right to obtain a judicial determination of whether a particular dispute is arbitrable. He stated that this is consistent with line 12-14. Number 0200 REPRESENTATIVE JAMES stated that it is not that one can not get to a judicial solution. Number 0209 CHAIRMAN GREEN said, "Would this be a chilling affect of ever having this in an agreement." Number 0239 REPRESENTATIVE ROKEBERG asked how many hearings has this bill had. MR. BURNETT replied it has been heard in the Senate Judiciary, Labor and Commerce and Rules. REPRESENTATIVE ROKEBERG asked if there are any witness from the real estate industry. Number 0257 MR. BURNETT replied that he discussed it with members of the industry and none of them had any opposition to it. They have neither testified against it or for it. REPRESENTATIVE ROKEBERG asked if there was a reason for the immediate effective date. Number 0276 MR. BURNETT stated that it was suggested by Bill McNall. REPRESENTATIVE ROKEBERG asked if he had thought of the ramifications of an immediate effective date. MR. BURNETT replied that it has not come up in any of the hearings. REPRESENTATIVE ROKEBERG stated that there would be a high cost to the state by having an immediate effective date. Number 0301 MR. BURNETT stated that the sponsor would agree that having an immediate effective date on that basis is not a good idea. Number 0313 REPRESENTATIVE ROKEBERG asked if the arbitration provisions allow for judicial appeal if there is a lack of satisfaction at arbitration. MR. BURNETT replied that they do not. REPRESENTATIVE ROKEBERG asked if that was in the definition of arbitration or could one appeal from an arbitrators ruling if one agreed to it prior to the arbitration. Number 0341 MR. BURNETT stated that he believed one could if it was mutually agreed to. However the Anchorage MLS agreement does not allow for it. Number 0348 REPRESENTATIVE ROKEBERG asked if Mr. Burnett was aware that this bill is labeled as a "make work for attorney's bill." MR. BURNETT replied that he has heard that concern expressed, however he stated that is not the sponsors intent. Number 0372 REPRESENTATIVE ROKEBERG asked how many witnesses in the various branches of the law testified for or against this bill. MR. BURNETT replied that two attorneys have testified on the bill. Number 0395 REPRESENTATIVE PORTER stated that he would like to read his changes that would make more sense in the bill. He stated that on line 10, page 2, delete "has" and insert "may have" after the word "party." After the word "arbitration" delete "and" and insert "or". He stated on line 11, insert "the" before "arbitration," insert "may" before the word "limits" and change that to "limit". He stated that on line 12, after the word "state," delete "that" and insert "whether". On line 13 delete "do not" after the word "agreement." Number 0478 MR. BURNETT stated that the sponsor's sole concern is to make sure that a person entering into an agreement, that contains an arbitration clause, has some type of notice that lets them know that they are waiving their constitutional rights to go to court. Number 0492 CHAIRMAN GREEN stated that with that in mind he would subscribe to the way Representative Porter has modified it as it reads easier. He asked if he is offering it as an amendment. REPRESENTATIVE PORTER made a motion to adopt Amendment 1. Number 0549 CHAIRMAN GREEN asked if there was an objection. Hearing none, Amendment 1 was adopted. Number 0549 REPRESENTATIVE ROKEBERG stated that he is nervous about the bill he does not think that it has had a proper hearing. He stated that the general public has not been noticed and the real estate industry is barely aware of its existence, if at all. He stated that to put this into a contract, particularly a real estate contract there should be some feedback from those people. Number 0613 REPRESENTATIVE JAMES asked if it would be proper to take this bill up the following day. Number 0624 REPRESENTATIVE BERKOWITZ stated that perhaps they could hear from the alternate dispute section of the bar tomorrow. Number 0639 CHAIRMAN GREEN stated that the committee will hold off on any further action on the bill and hold the bill over.
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