In a debt collection case, a federal court in Illinois held that the Federal Arbitration Act's (FAA) one-year statute of limitations for confirming awards is permissive rather than mandatory. Thus, a debt collector's motion to confirm brought more than one year after entry of the award was not a violation of the Fair Debt Collection Practices Act (FDCPA).

In Kolowski v. Blatt, Hasenmiller, Leibsker & Moore, LLC, No. 07 C 4964, 2008 WL 4372711 (N.D. Ill. Mar 20, 2008), the law firm Blatt, Hasenmiller, Leibsker & Moore, LLC (Blatt) sought to collect a credit card debt from Kolowski on behalf of a credit card company. Blatt obtained a favorable arbitration award, and after Kolowski failed to pay, Blatt filed an action to confirm the award in court, nearly two years after the award was entered.

In response, Kolowski sued Blatt, alleging that Blatt's confirmation action violated sections 1692e(2) and 1692f(1) of the FDCPA because the one-year statute of limitations for filing the action to confirm had already expired under section 9 of the FAA. Blatt moved to dismiss, arguing that its action to confirm the arbitration award was timely because the FAA's one-year statute of limitations is permissive, not mandatory.

The issue was one of first impression in the Seventh Circuit, and the Court noted that other courts are divided as to whether the one-year provision in § 9 of the FAA is mandatory or permissive. The Court noted that the Fourth, Sixth, and Eighth Circuits have found the provision permissive, while the Second Circuit has held that it is mandatory. Illinois state courts had not decided the issue, so the Court held that it would determine the issue according to which position was more persuasive.

The Court determined that the arguments for a permissive interpretation of the one-year statute of limitations were more persuasive. The Court held that the permissive interpretation is consistent with the policy behind the FAA of supporting arbitration, "allowing it to be speedy and not subject to delay and obstruction in the courts, and promoting judicial economy." The Court found that a mandatory interpretation "is likely to increase the number of confirmation lawsuits that parties will find necessary to file, thus increasing the expense of arbitration and placing an extra burden on courts. Rather than wait longer for the losing party to voluntarily comply with the arbitration award, many winning parties would find it necessary to seek confirmation to avoid losing the possibility of being able to enforce the award."

Similarly, the Court held that a mandatory one-year limitation period would provide the losing party with a disincentive to comply with the award in the hope that the winning party would fail to timely confirm the award and thus lose its ability to enforce the award. Consequently, the Court held that it would apply a permissive interpretation of the one-year limitations period in section 9 of the FAA and, accordingly, held that Blatt's motion to confirm was timely. Thus, the Court granted Blatt's motion to dismiss based on Kolowski failure to substantiate an FDCPA violation.