National Defense Authorization Act Amends SCRA to Restrict Use of Arbitration Agreements and Waivers of SCRA Protections | Ballard Spahr srl

0

In addition to changes to the Fair Credit Reporting Act Dealing with the reporting of adverse information about service members by consumer news agencies, the National Defense Authorization Act (NDAA) as passed by the House and now directed to the Senate includes amendments to the law on civilian assistance to the military which restrict the use of arbitration agreements and waivers of SCRA protections.

Arbitration. The NDAA adds a new provision to the SCRA that requires written consent after a dispute to resort to arbitration “whenever a contract with a member, or a member and his or her spouse, provides for the use of arbitration to resolve a dispute that is the subject of a provision of [the SCRA] and arising out of or relating to such contract. All parties to the dispute must give this written consent. The requirement applies to all contracts “entered into, amended, altered, modified, renewed or extended after the date of promulgation of [the NDAA]. “

The Military Loans Act, which applies to certain loans made to military personnel already on active duty, prohibits the use of binding arbitration agreements in loans covered by the LBA. The proposed SCRA Amendment would complement this protection by restricting the application of arbitration provisions against active service members where the underlying agreement was reached before the start of active service. (However, the coverage of the SCRA is broader than the MLA. The MLA applies to loans covered by TILA, except purchase loans and mortgages, while the SCRA covers a wide range of obligations. , not just loans.)

Derogations. The SCRA allows a service member to waive the protections of the SCRA and generally requires that for a waiver to be effective, (1) it must be in writing and (2) the waiver agreement must be separate from the document creating the obligation or liability to which the waiver applies and performed during or after the member’s period of military service.

The NDAA amends the SCRA waiver provision to add the requirement that for a waiver to be effective, it must be accepted after a specific dispute has arisen and must identify the dispute. The amendment applies to waivers made on or after the date of enactment of the NDAA.


Source link

Leave A Reply

Your email address will not be published.