A federal district court in Hawaii recently issued an opinion raising fundamental questions regarding the Federal Arbitration Act. A-1 A-Lectrician, Inc. v. Commonwealth Reit, Civ.No. 12–00607 (D. Haw. Apr. 26, 2103). The parties involved sixteen small merchants who entered into long-term leases for lots in an industrial estate. The leases provided for an appraisal process to determine rents every few years, and the lessees asked the court to consolidate the separate appraisals into one proceeding. The court granted permission to conduct limited discovery regarding the intent of the original parties with respect to consolidation.
In making its decision regarding discovery, the court noted several conflicting court decisions regarding FAA law, such as whether the FAA applies to an arbitration involving a real estate transaction, whether state law or federal law determines the definition of arbitration, and whether real estate appraisals are considered arbitration under the FAA.
Some of these same issues were raised in the recent Second Circuit’s Bakoss case, and the Supreme Court recently granted permission to extend the deadline to file a cert petition in the Bakoss case.