Appendix III to Part Ten — Rationale of Declaratory Relief and of Judicial Enforcement in Matters of Arbitration

With respect to arbitration awards rendered by Member Boards, it is important that the Board utilize the powers of local courts to support and enforce its arbitration awards and any Board actions contemplated in connection with arbitration by the Board. Both the Petition for Declaratory Relief and Petition for Judicial Enforcement should be employed by the Board where it will confirm the propriety of the Board’s actions and will minimize legal vulnerability and liability to the Board and its members. These legal procedures, or similar legal devices available in a given state, should be employed in the following circumstances:

(1) Refusal to Arbitrate: If a membership obligation to arbitrate disputes is permitted by applicable law, it is required of members in accordance with the Board’s professional standards procedures. Refusal of a member to arbitrate, or mediate if required by the board, shall be determined by a hearing by the Board of Directors as specified in Part Ten, Section 49, Initial Action of Directors. (Revised 05/15)

Upon determination of the sole question of fact that a Board Member has refused to arbitrate or mediate a properly arbitrable matter, the Board of Directors may direct the implementation of appropriate sanction, and should, if it has reason to believe that the imposition of sanction will become the basis of litigation and a claim for damages consequent to such sanction, delay the effective date of implementing the sanction to a date following receipt by the Board of a judicial decision in a petition for declaratory relief filed by the Board to confirm the propriety of its action. (Revised 05/15)

(2) Refusal to to, within Ten (10) Days of Transmittal of Award, Abide by Award or Deposit a Like Amount with Board Staff: Consistent with Section 53, The Award, the non-prevailing party must, within ten (10) days following transmittal of the award, either pay the award to the party(ies) named in the award or deposit the funds with the Professional Standards Administrator to be held in an escrow or trust account maintained for that purpose. Failure to satisfy the award or deposit the funds in the escrow or trust account within the time specified may be considered a violation of a membership duty and may subject the member to disciplinary action at the discretion of the Board of Directors, consistent with Section 53, The Award. (Adopted 05/15)

Requiring the non-prevailing party to, within ten (10) days, either pay the award or deposit the funds with the Board reduces instances of non-prevailing parties refusing to pay arbitration awards by shifting the burden of initiating litigation from the prevailing party to the non-prevailing party. (Adopted 05/15)

With respect to a party agreeing and submitting to arbitration but then refusing to abide by the award, the Board should encourage the award recipient to seek enforcement of the award in the courts, and suggest that a request be made for payment of legal costs incurred in seeking judicial enforcement. (Amended 05/15)

Although the primary responsibility for the enforcement of the award rests with the beneficiary of that award (with the support, financial or otherwise, of the Board), the Board may consider reimbursing the recipient of the award for any cost incurred in seeking the judicial enforcement when such costs are not reimbursed by the court. (Revised 05/15)