President Barack Obama Signs Legislation that Provides for Arbitration to Appeal Termination of GM and Chrysler Franchise Agreements

To follow up on our earlier post, here is an article by Automotive News:


Neil Roland
Automotive News
December 17, 2009

WASHINGTON — President Barack Obama signed legislation that would give rejected General Motors Co. and Chrysler Group dealers access to neutral arbitration if they want to be reinstated, kicking off a a six-and-a-half months arbitration process.

GM and Chrysler now have 30 days to send letters to the owners of about 2,150 rejected dealerships informing them of their rights under the new law and spelling out the reasons that their franchise agreements were terminated.

With Obama’s signature, the eliminated dealerships have 40 days to give notice that they intend to seek arbitration.

Arbitration must be completed within six months, and dealerships that win must receive a letter of intent from the automakers within another 14 business days.

The legislation that Obama signed was a $446 billion spending bill that contained the dealer-arbitration provisions spearheaded by Rep. Steny Hoyer, D-Md., the House majority leader, and Sen. Dick Durbin, D-Ill., the assistant Senate majority leader.

Hoyer and Durbin acted this month after GM and Chrysler broke off settlement talks and announced plans to create neutral arbitration applying the original criteria they used to mark dealerships for termination.

The new law contains criteria more favorable to dealers than those envisioned by GM and Chrysler.

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