Part 11: Interboard Arbitration Procedures
Part 11: Interboard Arbitration Procedures
Introduction: By becoming and remaining a member of the National Association, each Member Board is required to provide and participate in interboard arbitration when arbitrable issues arise between a Board Member and a member of another Board within the state, as defined in Article 17 of the Code of Ethics and Sections 43 and 44 of this Manual. However, the complainant should be advised that should he voluntarily agree to travel to the Board having jurisdiction over the respondent and submit to arbitration conducted by that Board, that Board shall provide arbitration as requested subject to the provisions of this Manual. In instances where the State Association does not provide procedures for conducting interboard arbitration, the arbitration should be arranged by joint effort of the two (2) Boards having members involved in an arbitrable issue, and the following procedures shall apply. (Revised 11/96)
Initiation of procedures: Interboard arbitration is initiated by the written request of a REALTOR® to the Professional Standards Administrator of the Board of which the REALTOR® is a member, who shall, in turn, arrange interboard arbitration with the other Board. Where a written interboard arbitration agreement exists between two (2) or more Boards, the determination as to whether an arbitrable matter exists shall be made pursuant to those procedures. Where no agreement exists between Boards, interboard arbitration may take place provided that the Grievance Committees of each Board determine that a properly arbitrable matter exists. Appeals of arbitration requests dismissed by the Grievance Committee and alleged misclassification of an issue as being subject to either voluntary or mandatory arbitration shall be considered by the Board of Directors of the Board whose Grievance Committee’s decision is being challenged pursuant to the existing procedures of that Board. (Revised 11/98)
Fee deposit and arbitration agreement: The request for interboard arbitration shall be accompanied by a deposit not to exceed $500, which shall go toward the costs of arbitration as determined by the panel, and by a signed arbitration agreement, which may be in the form of Specimen Form #A-1, Part Thirteen of this Manual, or in any other appropriate form provided or permitted by law. (Revised 11/96)
Interboard arbitration involving parties in Boards distant from each other may involve costs including travel expenses of the arbitration panel and other expenses of the arbitration. (Revised 5/06)
Boards should establish a filing fee for interboard arbitration that may be the same as or different from filing fees for arbitration not conducted pursuant to Part Eleven, provided that the total cost that may be charged any party, including any filing fee, may not exceed $500. Boards administering arbitration pursuant to Part Eleven should agree prior to any hearing which Board will retain the respective parties’ filing fees. (Revised 5/06)
Selection of panel: Each Board participating in the interboard arbitration procedure shall select one member of the arbitration panel from its Professional Standards Committee. The Chair of each Board’s Professional Standards Committee shall agree upon the third member of the panel. The panel shall select its Chairperson. The Executive Officer or Professional Standards Administrator of the Board of which the Chairperson is a member shall serve as Professional Standards Administrator of the panel. (Revised 11/03)
All parties have the right to challenge the qualifications of any arbitrator so selected upon showing good and sufficient cause why the arbitrator should not serve. Questions concerning the qualification of any arbitrator shall be determined by the President of the Board from which the arbitrator was selected.
Hearings and the organization and procedures incident thereto shall be governed by the Code of Ethics and Arbitration Manual of the National Association as adapted to conform to the provisions of applicable state law and the optional provisions adopted by the Professional Standards Administrator and Chairperson of the panel’s Board. (Adopted 11/98)
Arbitration request and response: The Secretaries of the Boards involved with the interboard arbitration shall ensure that the panel Professional Standards Administrator receives all documents related to the arbitration request. The panel Professional Standards Administrator may require the complainant to submit sufficient copies of the arbitration request and related documents for each member of the panel and the respondent or respondents. Within _________ days after the interboard arbitration panel has been formed, the panel Professional Standards Administrator shall send a copy of the arbitration request to the respondent, informing the respondent that he may file a written response with the panel Professional Standards Administrator (if the respondent has not already received a copy of the arbitration request and had an opportunity to submit a response) within twenty-one (21) days from the date of the letter in which the request for arbitration was transmitted to him, including sufficient copies for each Hearing Panel member and the complainant. If the arbitration request has already been provided to the respondent and a response solicited, the panel Professional Standards Administrator shall obtain the response from the Board which requested it and ensure that the complainant receives a copy. The panel Professional Standards Administrator may require the respondent to submit sufficient copies of the response for each member of the panel and the complainant or complainants. Any response shall be accompanied by a signed arbitration agreement, which may be in the form of Specimen Form #A-4, Part Thirteen of this Manual, or in any other appropriate form provided or permitted by law, and a deposit not to exceed $500, which shall go toward costs of such arbitration if so determined by the arbitration panel, or shall be returned as determined by the panel. (Revised 11/14)
The panel Professional Standards Administrator shall then schedule a hearing consistent with the procedures established in the Code of Ethics and Arbitration Manual of the NATIONAL ASSOCIATION OF REALTORS®. Interboard arbitration shall not proceed unless signed arbitration agreements and deposits have been received from the complainant and respondent. (Revised 11/95)
Right of interboard arbitration panel to release members from obligation to arbitrate: If the arbitration panel determines that, because of the amount involved or the legal complexity of the dispute, the dispute should not be arbitrated, it shall advise the parties, the arbitration shall terminate, and the parties shall be relieved of their obligation to arbitrate. The Hearing Panel can also dismiss the arbitration request if the Hearing Panel concludes the matter is not arbitrable, and the parties shall be relieved of their obligation to arbitrate. If no interboard hearing on the merits is held, any deposits made by the parties shall be returned to them. (Revised 11/98)
Further, if the panel determines that an arbitrable matter exists but it is not subject to mandatory arbitration, neither party may be compelled to arbitrate, and the arbitration shall terminate unless all parties voluntarily agree to take part and abide by the decision.
Either party has twenty (20) days to appeal from the date of notice that the panel declined to continue the proceeding. The materials presented to the Hearing Panel when the Hearing Panel made its decision to dismiss together with any party’s written rationale challenging the panel’s reasons for dismissal and the dismissal itself will be presented to the appeal panel comprised of a minimum of five (5) members (who did not previously sit in review of the arbitration request) from the parties’ Boards to be appointed by the Boards’ Presidents. The request for arbitration and any attachments thereto cannot be revised, modified, or supplemented. The parties do not have the right to appear at the hearing before the appeal panel. (Revised 5/07)
Place, date, and time of hearing: The panel Chairperson shall designate the date, time, and place of the hearing. Parties’ requests for continuances shall only be granted when all parties mutually agree to a subsequent specified date, or when the hearing panel chair determines that denying the continuance would deny the requestor a fair hearing. Each party shall be given at least twenty-one (21) days’ prior notice of the hearing, but appearance at the hearing waives the right to such notice. The arbitrators may recess the hearing from time to time as necessary and, on request of a party or upon the arbitrators’ own motion, may postpone the hearing for not more than thirty (30) days, unless otherwise agreed to by the parties. (Revised 11/14)
Conduct of hearing: The Chairperson shall preside at the hearing, which shall not be bound by the strict rules of evidence applicable to judicial tribunals, but by the Outline of Procedure for Arbitration Hearing found in Part Twelve of this Manual, and by the Chairperson’s Procedural Guide: Conduct of an Interboard Arbitration Hearing, also in Part Twelve of this Manual.
Testimony and documentary evidence: Parties to disputes may testify on their own behalf and may present testimony of witnesses and introduce documentary evidence. Any party may examine and cross-examine witnesses, and at the request of any party or on its own motion, the panel, at its discretion, may exclude witnesses or evidence.
Legal counsel: Parties may, at their own expense, have legal counsel present during the hearing, provided they notify the panel and the other party, in writing, of their intention to do so at least fifteen (15) days prior to the date fixed for the hearing, including counsel’s name, address, and phone number. The panel may have legal counsel present. (Revised 11/97)
The Arbitration Hearing: The following procedure is to be followed in conducting the hearing:*
(a) Prior to the giving of any testimony, all witnesses shall be sworn or affirmed by the panel Chairperson.
(b) Each party or his attorney shall be given the opportunity of making an opening statement.
(c) Witnesses shall be present only as necessary to present their testimony.
(d) The complainant may present evidence and give testimony as deemed applicable to the arbitration by the Hearing Panel. No testimony may be admitted related to the character or general business reputation of any party unless such testimony has a direct bearing on the matter being heard.
*Such hearing shall be conducted according to the Chairperson’s Procedural Guide: Conduct of an Interboard Arbitration Hearing, in Part Twelve of this Manual.
(e) The parties to the dispute shall present to the arbitrators, in writing, such statements and proof as they deem necessary or desirable, or as the arbitrators request. Proof may be submitted in the form of affidavits or in any other acceptable form. The arbitration panel may require that statements be verified by affidavit or that the accuracy or authenticity of any documents or other papers submitted be verified by affidavit. The panel shall receive and consider any evidence it deems material and proper, including evidence of accountants and other experts. Each party is responsible for the expenses of expert witnesses he calls.
(f) At the conclusion of direct examination, the opposing party or his counsel may cross-examine the witness.
(g) When both parties have concluded their examination or cross-examination of a witness, the arbitrators may examine the witness.
(h) Upon completion of all testimony, each party or his attorney may summarize the proceedings to the arbitration panel. The complainant will open the summation and the respondent will close the summation.
(i) Thereafter, the parties shall be excused and the matter will stand submitted.
Recordation: Any party (may/may not), at his own expense, have a court reporter present, or may record the proceeding, and, if transcribed, shall furnish a transcript to the panel. The panel may also cause the hearing to be transcribed or recorded on its own motion.
Adjournment: The panel may adjourn the hearing from time to time as necessity or convenience dictates.
Settlement: The parties to the arbitration may settle the dispute by agreement at any time. In such event, the arbitration proceedings shall be terminated.
The award: The award of the arbitrators (Form #A-12, Part Thirteen of this Manual) shall be made as soon as feasible after the evidence is presented. The award shall be in writing and signed by the arbitrators, or a majority of them, and when so signed and transmitted to each of the parties shall be final and binding, and shall not be subject to review or appeal except as required by other provisions of this Manual or by applicable state law. Any procedural review request (which must be limited to issues of due process) shall be filed with the panel Professional Standards Administrator for consideration by a special review panel comprising an equal number of Directors from each Board, chosen by the respective Board President, which shall select its own Chairperson who will preside but will not vote. (This ensures an odd number of panelists.) Dissemination of the award shall be limited to the parties involved, the Board of Directors of each Board of REALTORS®, and legal counsel and staff on a need-to-know basis. (Revised 11/14)
The non-prevailing party shall, within ten (10) days of the date the award is transmitted, either pay the award to the party(ies) named in the award or deposit the funds with the Professional Standards Administrator of the Board administering the arbitration consistent with Section 53, The Award, Code of Ethics and Arbitration Manual. Failure to either pay the award or deposit the funds as provided for in Section 53, The Award, may subject the nonprevailing party to discipline, including but not limited to termination of Board membership and/or MLS access/use, consistent with Section 53. The tribunal reviewing an allegation that a nonprevailing party either did not timely pay the award or deposit a like amount will be composed of an equal number of Directors from each Board, chosen by the respective Board President, which shall select its own Chairperson who will preside but not vote. (Adopted 05/15)
Costs of arbitration: Interboard arbitration may involve travel and necessary out-of-pocket expenses by the arbitrators. The arbitrators shall receive reimbursement of travel and out-of-pocket expenses incurred in connection with their service as arbitrators. Expenses of the arbitrators and all other expenses, including the panel’s use of legal counsel and recordation or transcription of the hearing, shall be borne by the Boards involved as agreed in advance of the hearing. (Revised 5/06)
Refusal to Arbitrate: In the event a complainant alleges that the respondent has improperly refused to submit a dispute to arbitration (or to mediation if the respondent's Board requires REALTORS® [principals] to mediate otherwise arbitrable disputes pursuant to Article 17),* the allegation shall be brought before a tribunal of five (5) members selected by the Board President from members of the respondent’s Board of Directors. The procedures for notices, time of notices, and hearing prescribed for matters before a Hearing Panel shall apply. The sole question of fact will be to decide whether the party has refused to submit an arbitrable matter to arbitration (or to mediation if required) in violation of Article 17. Upon determination that the member has refused to arbitrate or mediate a properly arbitrable matter, the tribunal may direct implementation of appropriate sanction, including suspension or expulsion of the member from the local Board of REALTORS®. The decision of the tribunal shall be final and binding and is not subject to further review by the State Association or any local Board. (Revised 11/11)
Enforcement: If a member fails to comply with an award or the terms of a mediated settlement agreement, the recipient to whom the award has been rendered by the arbitration panel or the beneficiary of a settlement agreement reached by the parties in mediation, shall be advised by the panel to seek judicial enforcement and request reimbursement of all legal costs incurred in seeking such enforcement. At the discretion of the Board of Directors of the Board of which the award recipient, or the beneficiary of a settlement agreement, is a member, the Board may support the request for judicial enforcement in the court and, at the further discretion of the Board of Directors, reimburse the award recipient/beneficiary for costs incurred in seeking such enforcement if the courts do not award reimbursement of such costs. (Revised 11/14)
Special Note Concerning Interstate Arbitration: The interboard arbitration method may also be utilized for the conduct of arbitration between Board Members of different Boards in different states, subject to the parties’ voluntary agreement in advance to accept the place, date, and time established by the arbitration panel chosen and to pay all costs of such arbitration as may be directed by the panel, provided that the state in which each of the parties to the arbitration resides, and the state in which the arbitration is held, permits binding arbitration. Or, alternatively, if a Board Member voluntarily agrees to travel to the Board having jurisdiction of the other Board Member in another state and to submit to arbitration by that Board, the Board shall provide arbitration as requested if it deems the dispute an arbitrable matter and further subject to the provisions of Part Ten, Section 45 of this Manual, which sets forth the right of the Board to decline to arbitrate a dispute.
*Requiring REALTORS® (principals) to mediate otherwise arbitrable disputes requires establishment of an affirmative obligation in a Board’s governing documents. Enabling bylaw provisions can be found at REALTOR.org (see Model Bylaws).