Consumer Law

National Arbitration Forum awards may be unenforceable

By Sam Glover

The Minnesota Attorney General’s lawsuit against National Arbitration forum alleges that NAF is “in cahoots” with one of the largest debt collection law firms in the United States, Mann Bracken. Mann Bracken, un-coincidentally, is also one of NAF’s best clients.

Arbitration awards are routinely confirmed by state district courts, as they must be under the Federal Arbitration Act as currently written. After confirmation, the creditor may use garnishment, levy, and other collection tools to collect the award—now a judgment. But the FAA provides for several reasons why state courts should not enforce arbitration awards; one reason is partiality or corruption.

The Minnesota Attorney General’s lawsuit calls into serious question NAF’s impartiality. And although NAF agreed to stop handling consumer arbitrations, there are thousands of arbitration awards floating around that remain potential enforceable.

Consumers facing motions to confirm arbitration awards in district court should bring up the allegations in the lawsuit and question NAF’s impartiality. If NAF is basically working for creditors and debt collectors, their impartiality is merely an illusion, and the arbitration awards should be vacated.

Full post as published by Caveat Emptor on July 21, 2009 (boomark / email).