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Arbitrage et droit administratif : l'expérience des États-Unis

Issu de Cahiers de l'arbitrage - n°2 - page 271

Date de parution : 01/07/2015
Id : CAPJIA2015-2-009
Réf : CAPJIA 2015, p. 271

Auteur :
Par William Peterson, Membre des barreaux de Marseille et de Californie, Associé au Cabinet d'avocats Ringlé,
Roy et Associés à Marseille

For comparison purposes, this presentation takes conference participants on a short voyage to another legal world, actually two worlds, contractual
litigation with first the United States Federal Government and second, with the State of California in public works contracts.

As the subject is rather vast, this discussion is limited principally to litigation of contract claims with the Federal Government.

Although the use of ADR (Alternative Dispute Resolution) in general is strongly encouraged in the federal sector in the United States, there are
restrictive conditions on the ability of Federal Government Agencies or Administrations to use arbitration. Moreover, the longstanding existence of
another « forum » to resolve disputes, the « Boards of Contract Appeals » has likely contributed to the lack of recourse to arbitration.

On the other hand, for public works contracts in California, arbitration is the norm. Throughout the research and various exchanges made in
preparation for this presentation, no particular problems were uncovered concerning jurisdiction or enforcement of arbitration awards where federal
or state governments were party to the dispute.

Litigation of contracts claims with the Federal Government:

To begin with, arbitration is included as a means of alternative resolution as it falls within the definition of ADR (section 571 (3) U.S. Code). This being
said, at the federal level, when one speaks of ADR generally, mediation is usually what is meant.

According to the American Arbitration Association, mediation is the ADR method most used in the federal sector. In 2013, the AAA received more than
200,000 requests for ADR (all sectors combined).1

The Administrative Dispute Resolution Act of 1996 (ADRA) is the main law governing use of ADR, including arbitration, when the U.S. Government is a
party (sections 571-584 of the U.S. Code, Title 5, Chapter 5).

In principle, arbitration is possible with the Federal Government, as it is expressly provided for under section 575 of the Act.

However, the law provides criteria that Federal Government Agencies must take into account which could prevent use of an ADR procedure in general,
and provides additional requirements for arbitration.

For example:

– When the value of « precedent » is important, use of an ADR procedure can be precluded, or

– When the case involves important questions of « policy » (government policy), use of an ADR procedure can be precluded.

More importantly, the arbitration agreement must provide a ceiling on the amount of damages for the award (Section 575 (a) (2)).

– Following discussions with the Department of Justice in Washington, this condition by itself limits recourse to arbitration.2

– Note the existence of the Office of Dispute Resolution for ADR within the Department of Justice in Washington D.C.

Generally, for a federal administration (often referred to as a federal “agency”) to be able to use arbitration, it must first obtain approval from the U.S.
Department of Justice.3

In the U.S. federal sector, these issues are usually considered and treated at the creation of a federal program or at the conclusion of a contract, when
the administration agrees to be a party.

In this context, enforcement of an award is not an issue.

According to informal exchanges with the American Arbitration Association, awards rendered abroad with federal agencies would be rare.

At the federal level, contractual claims are handled by the Federal Boards of Contract Appeals.

The Board is similar to a tribunal but it deals primarily with contractual disputes.

– These « Boards » were established by the Contractual Disputes Act of 1978 (CDA) to settle disputes arising from a contract with the federal
government. 41 U.S.C. sections 7101- 7109.

– These Boards are responsible for providing an informal, inexpensive and rapid resolution to government contract disputes. According to one of my
colleagues, however, the procedure could take 2-3 years.

– After a petition filed before the relevant government agency resulting in a decision, there is an appeal to one of the Boards or the Court.

– The petitioner, co-contractor, has an option to petition the Board or the United States Court of Federal Claims. (41 U.S.C. section 7104 (b)).

– « Judges » of the « Board » are government employees but the Board is independent of each federal agency. To be a judge, you must be a member of
an American Bar and have at least 5 years of experience in public law litigation or contracts.4

– In addition to providing a tribunal with a complete procedure, these Boards also handle a variety of alternative dispute resolution procedures; these
procedures can be used either for requests already before the Board or for claims still in discussion with the agency in question.

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– These Boards are functionally independent of the federal agencies. Board decisions cannot be changed by the agency. They are final unless either
party appeals to the Federal Court of Appeals on questions of law.5

Since January 2007, two Boards are principally responsible for handling appeals of final decisions of federal agencies: one for the contracts with the
Defense Department, the other for other federal agencies.

– The ASBCA (Armed Services Board of Contract Appeals) is generally responsible for deciding appeals from decisions of contracting officers in the
Department of Defense, the Department of the Army, the Department of the Navy, NASA, and when specified, the CIA.

– The CBCA (Civilian Board of Contract Appeals) hears disputes from all other executive agencies except the United States Postal Service (USPS), the
Postal Rate Commission, and the Tennessee Valley Authority. 41 U.S.C. sections 7101-7109.

ADR before the Boards consists of several alternatives including notably:

– Mediation, the most frequent, and

– Summary trial or binding summary decision

“Summary Trial or binding summary decision” is an ADR procedure resulting in a binding decision. It is usually done in a summary trial.

This procedure is similar to arbitration and has been used to solve many claims.

– The parties must normally submit memoranda in advance of the hearing to identify the disputed facts and the applicable law.

– Audition of witnesses is possible.

– A judge of the Board then renders a very brief written decision binding on the parties. It has no precedential value and it is not subject to appeal.

– The American Bar Association’s Public Law Section recommends using this procedure for simple or well-defined problems, such as clear questions of
fact or regarding the issues of contract interpretation.6

California Public Works :

– Arbitration is the norm. It is organized within a specific law and set of regulations.7 There exists an entire arbitration program for disputes related to
the works contracted with the State, with certified arbitrators.

– And with a foreign arbitrator? Why not, but such an arbitrator must demonstrate experience with public works in the United States and knowledge of
the California law to be on the list.8 9 It looks like arbitration in this context outside California would not be possible.

And to finish our voyage,

If Ryan Air contracted with the San Francisco International Airport, for example?

– The airport is managed by the City of San Francisco.

– The legal director of the airport does not use arbitration. She could, but is satisfied by the legal proceedings in the courts resulting often in a rapid
amicable resolution through mediation.

My research on the subject and thus our voyage stops here.

Arbitration and other forms dispute resolution are prevalent in litigation of contracts with the Federal Government and the State of California. Based on
this short study, no specific problems with enforcement of awards were uncovered.

1 – 1. Co-responsable du programme de contentieux international à l’IDA dont le Vis Moot, Aix-Marseille Universitéw.peterson@ringleroy.com
2 – 2. Informal exchanges with S. Pierre Paret, Vice President for Government Relations for the American Arbitration Association based in Washington
and Mark E. Appel, Senior Vice President Europe, Middle East and Africa International Centre for Dispute Resolution of the AAA.
3 – 3. Joanna M. Jacobs, Office of Dispute Resolution, U.S. Department of Justice.
4 – 4. As of August 2009, the following agencies have issued approved guidance for ADR: Federal Aviation Administration, the Federal Deposit
Insurance Corporation, the Federal Motor Carrier Safety Administration, the Department of the Navy, Presidio Trust, and the Department of the
Treasury, Internal Revenue Service. (www.justice.gov/olp/federal-administrative-arbitration-glance).There are many more agencies that have adopted
ADR; the website has not been updated.
5 – 5. Qualifying Experience. An applicant, at the time of application, must be licensed to practice as an attorney under the laws of a State or the District
of Columbia, the Commonwealth of Puerto Rico, or any territorial court established under the Constitution. An applicant must have, in the aggregate,
at least five years of public contract law experience consisting of serving as an attorney or judge in:1. Proceedings before any federal agency boards of
contract appeals or comparable Federal, State, or local administrative bodies;2. Actions in courts of record involving public contract issues fully
comparable to those in proceedings before agency boards of contract appeals, or in fully comparable formal proceedings before Federal, State, or local
administrative bodies; or3. Advising on public contracts, or teaching or writing on the subject of public contract law.See
www.gsa.gov/portal/directive/d0/content/669742 (updated on 19/2/2015).
6 – 6. Appeal to the Court of Appeals for the Federal Circuit Board decisions issued under the CDA are final unless one of the parties appeals to the
United States Court of Appeals for the Federal Circuit (Federal Circuit), or, in the case of maritime appeals, the appropriate Federal District Court.
Because the Supreme Court rarely considers decisions regarding government contract disputes, the Federal Circuit typically provides the last
opportunity for review of a BCA decision.Board CDA decisions are final unless appealed to the Federal Circuit within 120 days of receiving the board’s
decision.The Federal Circuit follows two basic rules when reviewing a BCA decision. First, the Federal Circuit will review any legal issues or conclusions
anew, without being bound by the board’s determination. Second, the Federal Circuit will follow board findings of fact unless they are fraudulent,
arbitrary, capricious, or so grossly erroneous as to imply bad faith, or not supported by substantial evidence. If the board’s decision on a question of fact
is supported by substantial evidence, the Federal Circuit is “bound” by it. Appellants must show that the error (of fact or law) actually affected the
outcome of its case. Minor procedural errors rarely affect the outcome of a case.If the appellant is successful before the Federal Circuit, the court may
issue a decision in its favor or it may send the case back (remand) for further proceedings before the BCA.See page52, ABA Section of Public Contract
Law, Practicing before the Federal Boards of Contract Appeals
(2012).www.americanbar.org/content/dam/aba/administrative/public_contract_law/Final_Version_Practicing_Before_the_Federal_Boards_of_Contract
_Appeals.authcheckdam.pdf
7 – 7. See pages 16 & 17, ABA Section of Public Contract Law, Practicing before the Federal Boards of Contract Appeals (2012).
8 – 8. Informal exchanges with the legal services group within the Department of General Services for the State of California.See
www.dgs.ca.gov/oah/PWCAProgram.aspx andwww.documents.dgs.ca.gov/oah/pwca/PWCAStatutesandRegulations2007.pdf
9 – 9. Section 1395 of the California Code of Regulations. Standards and Qualifications.(a) Arbitrators shall have substantial experience in or directly
related to public works construction projects, particularly large-scale complex projects with or on behalf of federal, state or local government agencies,
and, Experience as an arbitrator or adjudicator of disputes arising out of such projects is necessary, as well as, knowledge of California construction law.

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(b) The experience in subdivision (a) may be met by a combination of factors, which shall include any one or more of the following:(1) Five or more years’
experience at the managerial or supervisory level in public works construction contracting with extensive experience in the resolution of disputes
arising out of public contract claims.(2) Five or more years’ experience as an attorney representing parties in litigating or arbitrating public works
construction contract claims.(3) Five or more years’ experience as a judge or arbitrator. This shall include extensive experience in adjudicating or
otherwise resolving public works construction contract claims or other large-scale or complex construction litigation.(c) Applicants are evaluated on an
individual basis by the Public Works Contract Arbitration Committee. The Committee has discretion to waive the experience and qualifications in (a) or
(b) on an individual’s demonstration of equivalent experience and qualifications.
10 – 10. CAL. Public Contract Code Section 22200; Section 22201.Unless otherwise prohibited by law, the terms of any public works contract may
include at the time of bidding and of award a provision for arbitration of any claim pursuant to Section 7.1 (commencing with Section 10240) of
Chapter 1 of Part 2. Section 7.1. Resolution of Contract Claims. Unless otherwise agreed by the parties, the arbitration shall be conducted by a single
arbitrator selected by the parties from the certified list created by the Public Works Contract Arbitration Committee. If the parties cannot agree on the
arbitrator, either party may petition the superior court to appoint one from the panel of arbitrators certified by the Public Works Contract Arbitration
Committee.

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