Enforcement of State Annexed-Arbitration Rules in Federal Courts with Diversity Jurisdiction: Towey v. Catling

Both state and federal court systems are swamped with litigants. This fact is so widely recognized, repeating it almost seems unnecessary. Courts experiment with a variety of approaches just to pump some of this litigious bilge into alternative forums for resolution. The state of Hawaii sought to lighten its overburdened docket with a Court Annexed Arbitration Program.2 It provides for mandatory submission of certain tort claims to arbitration.' It is non-binding and either party may obtain a trial de novo at its conclusion.4 However, to do so is not without risk.

Pursuit of a trial de novo gambles not only with the possibility of a less favorable outcome, but also with payment of the opponent's attorney's fees should one fail to improve upon the arbitrators judgment by at least 15%. 5 Disincentives such as this potential penalty are a common and integral element of an effective mandatory arbitration program.6 Without penalties there exists little, if any, reason for a dissatisfied party not to take a second bite at the apple.