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Equal Protection For Arbitration

By Charles F. Vuotto, Jr.


            As recently emphasized by our Supreme Court in the case of Fawzy v. Fawzy,[1] “our courts have long noted our public policy that encourages the use of arbitration proceedings as an alternative forum.”[2]   Our Supreme Court went on to state that the objective of arbitration is,

[t]he final disposition, in a speedy, inexpensive, expeditious and perhaps less formal manner, of the controversial differences between parties. Arbitration can attain its goal of providing final, speedy and inexpensive settlement of disputes only if judicial interference with the process is minimized; it is, after all, meant to be a substitute for and not a springboard for litigation.[3]

Over 25 years ago, the New Jersey Supreme Court in Faherty v. Faherty,[4] approved the arbitration of some family law issues, alimony and child support in particular.[5]  The Supreme Court reserved on arbitrating custody and time sharing.  The reservation left open inFaherty was resolved by the Fawzy Supreme Court, which now permits the arbitration of custody and time sharing issues.  The Court conditioned these arbitrations upon compliance with certain prerequisites and the application of a modified standard of review.  Notwithstanding these pronouncements and the actual provisions of the two relevant arbitration statutes permitting a stay of a case, the response by the trial courts to a case actually going to arbitration seems to be at odds with these laudable goals.

            This inconsistency is reflected in the lack of uniformity in the state of how judges address the procedural status of a case where the parties have agreed to arbitrate some or all of the issues.  In some counties, the case is maintained on the active docket and the parties are required to continue to make appearances for status or case management conferences.  In other counties, the court requires the parties to dismiss their divorce action without prejudice, with the right to reinstate it by formal or informal application within a specified period of time. Courts have also been known to divorce the parties based on their agreement to arbitrate all issues and leave it to them to resolve all substantive issues by making a subsequent application to confirm the arbitration award by way of a summary proceeding in accordance with the applicable arbitration statute.[6]  Although purely anecdotal, it appears that the most prevalent practice is to require the parties to dismiss their divorce action without prejudice.  The problem with this approach is multifaceted:  First, the parties are left without an avenue for immediate relief or enforcement mechanisms (without first moving to reinstate the case) in the event that a party fails to comply with the arbitration process or abide by an arbitrator’s interim award(s).  Second, one cannot assume administrative ease in reactivating a case on an informal basis.  Third, any orders protecting the rights of the parties entered prior to the arbitration will have no force and effect.

            These approaches are at odds with the pronouncements from our Supreme Court and the arbitration statutes themselves, as detailed below.  However, there is no question that a counter-consideration exists; namely, the duty of the courts to assure the speedy resolution of disputes.  We cannot forget one of the most troubling conclusions emanating from the Michaels Commission:[7] “cases take too long and cost too much.”  “Best Practices” arose to combat this conclusion.  Although many may argue with the conclusions of the Michaels Commission and the wisdom of how “Best Practices” was implemented, no one can argue with the goal of assuring speedy and economical litigation for those who are unfortunately required to resolve their disputes through the judicial system.

We must first review the two relevant arbitration statutes, which provide that a case may be stayed in the event of arbitration.  The Uniform Arbitration Act (“UAA”) provides that “if the court orders arbitration, the court on just terms shall stay any judicial proceeding that involves a claim subject to the arbitration.”[8]  The New Jersey Alternative Procedure for Dispute Resolution Act (“APDRA”)[9]  provides that

[i]n an action brought in any court upon an issue arising out of an agreement providing for alternative resolution under this act, the court, when satisfied that the issue involved is referable to alternative resolution, shall stay the action until the alternative resolution proceeding has been conducted in accordance with the terms of the agreement, unless the party seeking the stay is already in default.[10] 

            The concept of placing a case on the inactive list due to certain events or alternate proceedings is not without precedent in our judicial system or the rules and regulations promulgated by the Administrative Office of the Courts (“AOC”).  The obligations of the judiciary, as carried out by the AOC, is to assure the proper oversight of cases, as highlighted in memorandum dated April 27, 2004 from then acting AOC Administrative Director, Hon. Richard J. Williams.  This memorandum provides for a uniform statewide policy on inactivating cases.  The memorandum was addressed to Assignment Judges, Civil Presiding Judges, Criminal Presiding Judges, Family Presiding Judges, General Equity Presiding Judges and Presiding Judges in the Municipal Courts.  The policy became effective on July 1, 2004 and applied to all cases in the Civil, Criminal and Municipal Divisions and in both the Family and General Equity parts of the Chancery Division.  The memorandum reflects the basic principle of the court system, which is that cases should be moved as expeditiously as is possible and appropriate.  The memorandum goes on to state, however, that it must also be recognized that in some narrow circumstances, the court is precluded from moving a case.  The memorandum further recognizes that statistics measuring the health of our system must balance these factors to provide a realistic picture of the age and nature of the pending caseload.  Identifying backlogged cases permits the court system to focus its attention on disposition, but in turn by including cases that are beyond the system’s ability to move, distorts performance statistics and undermines credibility.[11] 

The memorandum defines inactivation as suspending action on a case and placing it temporarily in a status in which it is not counted in backlog and does not age.  The memorandum emphasizes that it is an administrative tool sparingly applied in a few, circumscribed case categories in which the court cannot move the case forward.  The preliminary statement of the memorandum concludes by stating that those categories of cases that may and may not be inactivated likely affect all vicinages more or less equally.  There are six limited circumstances, which may appropriately lead to a case inactivation according to this AOC memorandum. [12]  Interestingly, the memorandum notes that a “stayed” case is not “inactivated” and continues to age statistically.  The memorandum notes that although the number of inactivated cases will be far fewer under the statewide policy delineated therein, it is nonetheless important that these be closely monitored by the Presiding Judge and the Division Manager.  The memorandum further states that many, if not all, of the divisional automated systems are programmed to provide regular reports of inactivated cases.  Therefore, it appears that the system is already set up to monitor inactivated cases.

            Therefore, it would seem preferable for the parties, counsel, and the courts if there was a uniform approach, which addressed everyone’s concerns.  Specifically, this author proposes that the aforementioned AOC policy be amended to allow for a method by which a Family Part judge can place a matter on an inactive list when all (and perhaps even some) of the issues have been submitted to arbitration by the parties.  This should be tempered with the implementation of a time limit to conclude arbitration and a reasonable date to report back to the court.  Placing the case on the inactive list due to arbitration should effectuate a stay of all judicially initiated action including resolution of the issues being arbitrated until the arbitration proceedings has been conducted in accordance with the terms of the parties’ agreement to arbitrate.  No further court proceeding should be initiated by the court including but not limited to appearances at case management or status conferences, Early Settlement Panel, or trial.  The parties should not be required to report back to the court until the agreed upon arbitration process has run its course or at least until a reasonable period of time has expired.  Generally, that means that there should be no further action by the court until an arbitration award has been rendered and the parties have sought confirmation of that award under the terms of the UAA[13] or the APDRA.[14]  Such a process would follow the intent of the statutory scheme, facilitate the fulfillment of the public policy enunciated by our Supreme Court and achieve the goals of arbitration, namely the final, speedy and inexpensive resolution of disputes with minimal judicial interference.



[1] 199 N.J. 456 (2009).

[2] Id. at 468 (citing Wein v. Morris, 194 N.J. 364, 375-76, 944 A.2d 642 (2008) (quoting Perini Corp. v. Greate Bay Hotel & Casino, Inc., 129 N.J. 479, 489, 610 A.2d 364 (1992)). 

[3] Id.  See also Barcon Assocs. Inc. v. Tri-County Asphalt Corp., 86 N.J. 179, 187, 430 A.2d 214 (1981).

[4] 97 N.J. 99 (1984).

[5] Id. at 108-109.

[6] The potential loss of health insurance is one of a number of serious problems with this approach.

[7] Supreme Court Committee on Matrimonial Litigation, Final Report issued February 4, 1998 and published in the New Jersey Law Journal (issued as a supplement) on February 23, 1998.

[8] N.J.S.A. 2A:23B-7(g).

[9] N.J.S.A. 2A:23A-1 et seq.

[10] N.J.S.A 2A:23A-8

[11] See memorandum dated April 27, 2004 re: Uniform Statewide Policy on Inactivation of Cases/Excludable Time, from then acting AOC Administrative Director, Hon. Richard J. Williams.

[12]     1.  A necessary party is in the military (R. 1:13-6).

2.  A Civil or Special Civil Part forfeiture matter may be inactivated if the underlying criminal case is inactivated, e.g., because the defendant is a fugitive (see item 3, below); otherwise the Civil or Special Civil Part forfeiture matter may be stayed but not inactivated.  The rationale for the latter provision is that, if the underlying criminal case is not inactivated, the court system has the ability to effect the forward movement of the case indirectly by working with the prosecutor to move the case.

3.  The defendant is a criminal or juvenile fugitive for more than 30 days or, in a municipal court matter, a warrant has been issued for failure to appear and the defendant remains a fugitive, or DMV has suspended the license of an individual who does not respond to a traffic summons.  Such defendants are beyond the reach of the court and so the court can no longer effect the forward movement of the case.

4.  The court finds that a criminal or juvenile defendant lacks the fitness to be prosecuted.  N.J.S.A. 2C:4-6b requires the proceedings in such circumstances to be “suspended.”  (In general, however, illness or hospitalization or a party or witness should not result in the case being inactivated.  See below).

5.  The carrier providing insurance to a party in the litigation is in rehabilitation or liquidation.  The appellate opinion in Aly v. E.S. Sutton Realty, 360 N.J. Super. 214 (App. Div. 2003) requires that New Jersey judges give comity to out-of-state orders staying all cases in which the carrier in rehabilitation is involved.  Such orders may be extended indefinitely.  As to carriers in liquidation, N.J.S.A. 17:30A-18 provides that the carrier is entitled to a 120-day stay (which may be extended) so that the Guaranty Fund can assess the situation, assemble the files and be prepared to defend.

6.  A party in a Family Division dissolution case is in bankruptcy.  This situation may result in the case being held in abeyance until the bankruptcy stay is lifted.  Inactivation may not always be necessary in such instances, but may sometimes be appropriate.

Note:  With respect to Civil and General Equity matters, the party in bankruptcy may be dismissed and the case proceed with the remaining parties.  If this is not feasible, e.g., if the bankrupt party is the sole or pivotal defendant, the entire case may be dismissed without prejudice, to be restored when the Federal bankruptcy stay is lifted.  However, such an approach may not be feasible in a dissolution matter.  Thus, inactivation is permissible, within the discretion of the judge, only in Family dissolution cases.

[13] N.J.S.A. 2A:23B-1 et seq.

[14] N.J.S.A. 2A:23A-1 et seq.

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