Trump's Executive Orders Target Federal Government Arbitration Practice
On Day 68, midway through an executive order titled “Exclusions from Federal Labor-Management Relations Programs” (March 27, 2025) (available here), the Trump Administration made its first overt attack on arbitration.
Along with the purported changes to the rights of federal workers to organize and collectively bargain, this executive order also purports to revoke the federal government’s consent to arbitrate grievances and cancel the government’s authority to continue to participate in arbitrations that have already been filed.
This action reportedly will affect about one million federal employees. Max Nesterak, “Trump moves to rescind union rights of over 1 million federal workers—and other labor news, Minnesota Reformer (March 28) (available at https://bit.ly/3RvpyVO).
Immediately following the executive order, several executive branch departments and agencies filed suit, seeking “declaratory judgment . . . that [the executive branch departments and agencies] have the power to rescind or repudiate . . . Agreements,” including arbitration agreements. See the agencies’ complaint for declaratory relief at https://bit.ly/43urF3B.
As a result, federal courts and labor arbitrators will also be asked questions that, to date, have had only law school and moot court relevance:
1. What happens if one party to an arbitration agreement purports to unilaterally terminate a contract containing an arbitration agreement–does the agreement to arbitrate survive? Does that answer change if the U.S. federal government is the party terminating the agreement through an executive order citing national security?
2. What effect, if any, does the purported unilateral termination of an arbitration agreement have? As before, what effect would an executive order have on an agreement to arbitrate?
3. If an organization that is responsible for making arbitrator strike lists ceases to function, how can arbitrators be appointed, absent party agreement? Does it matter whether that organization ceased to exist based in any part on the action of any party?
And how would these answers change, if at all, if the right to arbitrate grievances was also protected by statute?
In the immediate term, one can imagine that the arbitration of federal sector labor disputes will be in flux as parties expend resources to determine the threshold questions of whether their disputes remain arbitrable.
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These arbitration implications follow the Trump administration moves earlier this month to shrink the Federal Mediation and Conciliation Service (FMCS), an organization that was statutorily mandated to provide workplace dispute resolution services for unionized private workplaces and the federal sector. The FMCS’s future is in question.
Back on Day 53 of the new administration, the first warning shot for ADR practitioners was fired. In the executive order “Continuing the Reduction of the Federal Bureaucracy” (March 14, 2025) (available here), President Trump ordered that the “non-statutory components and functions” of the FMCS be eliminated, and that their performance of their statutory functions be reduced to the minimum.
On March 19, 2025, the FMCS defended itself. See https://bit.ly/4bREmHQ.
In its press release, the FMCS assured all stakeholders that it remained operational, and would continue to track and service approximately 15,000 private sector collective bargaining agreements. It confirmed that its statutory functions, including minimizing labor disputes in the private sector through mediation, ensuring that labor disputes do not disrupt the delivery of health care, and assisting in postal service disputes would not be disrupted. It stated that it was still providing arbitration panels. Id.
See also Fred N. Thomas IV, “The Trump Administration’s Executive Orders and ADR in the Public Sector,” CPR Speaks (March 26) (available here).
FMCS services have quietly influenced and inspired the development of modern ADR on a global scale.
For example, FMCS is probably where the Procedural Order No. 1 (PO-1) used in international and commercial dispute resolution originates. (See a sample from International Centre for Settlement of Investor Disputes at https://bit.ly/4hWD4wI). In his “Preserving Perspectives” interview, Arthur Rovine described how labor-advocate-turned-international-arbitrator, Howard Holtzmann, brought the labor arbitration Case Management Order (“CMO-1”) to the Iran-U.S. Claims Tribunal. It was later used by actors on that tribunal in their international commercial and investment proceedings around the world. See “A Conversation with Arthur W. Rovine, Interviewed by the Hon. Charles N. Brower,” ITA-Institute for Transnational Arbitration, YouTube (Nov. 3, 2023) (available at https://bit.ly/43A5TeS).
The FMCS would have been where Holtzmann learned how to create the CMO, and FMCS proceedings would have been where he would have used one. All FMCS cases are ad hoc to the extreme: they are non-administered and are conducted without separate arbitration rules. It is the skydiving of arbitration, and a solid CMO (equivalent to PO-1) is one’s only parachute.
The FMCS has played an essential and historic role in the creation of arbitrator codes of conduct and professional responsibility. The FMCS co-authored one of the first codes of professional responsibility for labor arbitrators (in 1951). This Code inspired the 1977 Code of Ethics for Arbitrators in Commercial Disputes. See American Bar Association/College of Commercial Arbitrators Annotations to the Code of Ethics for Arbitrators In Commercial Disputes (available at https://bit.ly/3XDV4EG); see also, John D. Feerick, “1977 Code of Ethics for Arbitrators: An Outside Perspective, The Symposium: Ethics in a World of Mandatory Arbitration,” 18 Ga. St. U. L. Rev. 907 (2001-2002) (available at https://bit.ly/3G2GEb2)
An updated 2004 Code for labor arbitrators, again co-authored by the FMCS, the American Arbitration Association, and the National Academy of Arbitrators addresses an issue that has confounded international and commercial dispute resolution. The code includes a role for tribunal secretaries (called “associate” arbitrators in labor arbitration). Code Section H expressly allows “associate” arbitrators–with the parties’ consent–to draft awards. See the Arbitrator Code of Professional Responsibility on the FMCS website at https://bit.ly/3QXTwlm.
Consistent with this, the FMCS designed the leading and one of the most helpful labor arbitrator training courses in the United States–one that aims to create fully appointable arbitrators who are expertly able to address all of the issues that may arise in a labor arbitration. Most leading labor arbitrators received their first training with FMCS. The FMCS model could be followed by other arbitration institutions.
The FMCS has built demonstrable case management experience into their training. See FMCS website at www.fmcs.gov/fmcs-institute/becoming-labor-arbitrator. Prior to the executive orders, for a reasonable $3000 fee, aspiring arbitrators could participate in the FMCS “Becoming a Labor Arbitrator,” or BALA, course, advertised on the FMCS website at https://bit.ly/3FPifpr.
Following the now-canceled course, BALA participants could apprentice (i.e., serve as “associate” arbitrator) to an experienced labor arbitrator. To complete the BALA course and apply to join the FMCS panel, an aspiring arbitrator must be appointed as “associate” arbitrator in several cases (with party consent), write the first draft of the award (with party consent), and then present the redlined award as part of the application package to the FMCS, along with the actual award from the person appointed as arbitrator (again, with party consent).
This training program helps ensure that aspiring labor arbitrators–who, incidentally, must be “fully neutral” and are not permitted to double-hat and have separate labor law practices–are academically qualified and practically able to serve as labor arbitrators the minute they hang out a shingle. That they must serve in cases with party and arbitrator consent ahead of joining the panel also ensures that they understand the dynamics of what makes one appointable in a labor-management dispute.
For the commercial and international ADR specialists who think tribunal secretaries are the downfall of ADR, rest assured that labor arbitration has been doing just fine with its version of them. Being one is a recognized path to an arbitration career.
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The ADR community is at a loss with the apparent closing of the FMCS non-statutory functions as required by the executive order.
Regardless of how the courts may find, several arbitration institutions and panels, including the American Arbitration Association, JAMS Inc., and the Labor Relations Connections (see www.the-lrc.com), are already working to fill the gaps that have been left by the FMCS cuts. [CPR Institute President Serena Lee says that the organization will continue to monitor and report on federal ADR developments for its members and followers. The CPR Institute publishes this blog and wholly owns CPR Dispute Resolution Services LLC.]
The innovative and reasonably priced training provided by the FMCS–training that has proven useful and essential to ensure that pending demographic shifts are compensated by an ever-growing number of highly qualified and highly capable arbitrators–is another gap that remains to be filled.
And, given how labor arbitration, international arbitration, and commercial arbitration have grown as siblings (albeit with different statutory or treaty-based parents), one might wonder what the future has in store for those forms of peaceful dispute resolution. China, for example, has already filed a lawsuit with the World Trade Organization in response to planned tariffs on goods. Hannah Miao, “China Files Lawsuit Against New Tariffs With WTO,” Wall Street Journal (March 4) (available at https://bit.ly/4iexnKN).
Current executive orders, for example, could be met with trade treaty arbitrators who arguably might have authority to determine the international legality of current trade and tariff disputes.
International commercial and trade treaty arbitration may be the next venue for where revocation of consent to arbitrate, based on national security grounds, may be tested.
The executive orders related to unionized federal workers and the FMCS might be the harbingers of things to come.
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Dr. Katherine Simpson is an arbitrator with Simpson Dispute Resolution (U.S.) and 33 Bedford Row Chambers (UK). See https://simpsonadr.net.
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