how solo and small firms can leverage arbitration’s … · how solo and small firms can leverage...

NAPABA Annual Conference

How Solo and Small Firms can Leverage Arbitration’s Tools and Flexibility to Manage Cost and Efficiency

Summary: This course will provide an introduction to arbitration to solo and small firm practitioners with limited experience in the arbitration setting, with the goal of offering an overview, providing “take-home” practice pointers, and suggesting techniques for managing costs and maintaining the efficiency of the process. Presenters: Sasha S. Philip Theodore K. Cheng Gary Zhao James Lee Moderator: Debbie S. Crockett Course Length: 65 minutes I. Preliminary Hearing Demonstration (20 minutes)

A. Role Play The panelists will introduce a hypothetical and role play an abbreviated preliminary hearing to allow attendees to observe some of the “dos and don’ts” of such a hearing in practice.

B. Debrief

PowerPoint slides will guide the interactive debrief, with “true or false” statements inviting audience comments on key aspects of the preliminary hearing demonstration, followed by comments from the panelists.

II. Facilitated Discussion (20 minutes)

A. Introduction to Arbitration The panelists will provide an overview of arbitration and address key differences between arbitration and traditional litigation, including sample arbitration rules, contractual arbitration clauses, how to initiate arbitration, selection of the arbitrator(s), and phases of an arbitration proceeding.

B. Preliminary Hearings

The panelists will address differences between preliminary hearings in arbitration and initial pretrial conferences, focusing on key procedural issues, the exchange of information in written discovery and depositions, and motions practice.

C. Hearing on the Merits The panelists will address differences between arbitration and trial, including pre-hearing

requirements, conduct of the hearing, arbitration awards and appellate procedures. III. Group Discussion (20 minutes)

One of the greatest benefits of arbitration is the parties’ ability to manage costs and obtain an efficient and expedient decision on the merits of their case. The panelists will discuss techniques and strategies that can aid in doing so.

IV. Audience Questions (5 minutes)

______________________________________________________________________________________ © American Arbitration Association, Inc. All rights reserved. 1

MMooddeerrnn FFuurrnniisshhiinnggss vv.. CChhaappmmaann && AAssssoocciiaatteess

________________________________________________________________________


Before the American Arbitration Association

In the Matter of Arbitration Between Modern Furnishings Claimant

– and – COMPLAINT Chapman & Associates (DEMAND) Respondent Modern Furnishings entered into a business agreement with Chapman & Associates following extensive consultations between the owners, John Morgan and Pam Chapman.

The agreement is subject to arbitration pursuant to paragraph 18, which reads:

“Any controversy arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration only in the City of New York, State of New York, in accordance with the commercial rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.” The scope of the work specified in the written agreement called for the following:

• Develop and design a furniture, lighting and finishing plan. • Procure all furniture and furnishings. • Coordinate all deliveries and set-up.

Modern Furnishings will show that John Morgan provided consultation during each phase of the design and documented all change orders. We will further prove that before the design of each item was finalized, Pam Chapman viewed sketches or photographs and approved the material to be used. We will also prove that Pam Chapman approved each phase of the project and all change orders.

Pursuant to the arbitration provision in their business agreement, Modern Furnishings files this Demand for Arbitration with the American Arbitration Association and asserts that with all work being completed in accordance with the terms of the signed business agreement that it be paid the amount of $149,600 ($224,600 minus the down payment of $75,000) for services provided in the design of the furniture, lighting and finishing plan for Chapman & Associates and the procurement and delivery of all furniture and furnishings.

Modern Furnishings needs this matter resolved within the next 90 days so that they can secure their anticipated revenue flow, meet payroll and serve ongoing clients. This requires the hearing to be scheduled within the next 60 days. Since the arbitrator has the authority to set the hearing date, Modern Furnishings will ask the arbitrator to schedule a single day of hearing within the next 60 days.

Submitted: MM/DD/YY Steven Green Steven Green, Esq. Drew, Hudson and Jackson LLP Counsel for Claimant Modern Furnishings


Modern Furnishings

vs

Chapman & Associates

DISPUTES

If a dispute arises from or relates to this contract or the breach thereof, and if the dispute cannot be settled through direct discussions, the parties agree to endeavor first to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration. The parties further agree that any unresolved controversy or claim arising out of or relating to this contract, or breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Depositions, if determined by the arbitrator to be necessary, shall be limited to a maximum of 2 per party and shall be held within 30 days of the making of a request. Each deposition shall be limited to a maximum of 3 hours duration. The prevailing party may be entitled to an award of reasonable attorney fees. The prevailing party shall be awarded pre-judgment interest as allowed by applicable law. Except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties.


Before the American Arbitration Association

In the Matter of Arbitration Between Modern Furnishings Claimant

– and – ANSWER AND COUNTERCLAIM Chapman & Associates Respondent Now comes Respondent, Chapman & Associates, responding to the Demand for Arbitration filed by Claimant, Modern Furnishings, as follows: Respondent denies all claims made against it by Claimant and denies that it is responsible for the claim of $149,600 as the design, furniture and furnishings provided by Claimant did not conform to the agreement entered into by the parties. Claimant failed to deliver elegantly functional furniture; rather they provided unsuitable furniture and a non-utilitarian design that failed to meet the desired outcome of a business atmosphere expressing modern sophistication. Therefore, payment is properly not owed. Respondent repeatedly voiced complaints throughout each phase of the project and Claimant did not adequately respond. Modern Furnishings failed to deliver functional furniture that met the suitability and utilitarian standards discussed during initial consultations. Respondent hereby counterclaims in the amount of $75,000 representing the down payment made to Claimant, and for Claimant’s failure to effectively perform its duties. Chapman & Associates sees no way that an arbitration hearing can be conducted within the next 60 days. Pam Chapman will be out of the country for much of the days in the next several months. We prefer a hearing to be scheduled in four to six months. In addition, we believe that the one day of hearing requested by Modern Furnishings is unrealistic. Chapman & Associates will need an additional 2 days to present its counterclaim Respondent further demands the removal of all delivered furnishings. Respectfully submitted: MM/DD/YY Alicia Rodriguez Alicia Rodriguez, Esq. Young, Quentin & Byrnes LLP Counsel for Respondent Chapman & Associates

COMMERCIAL RULES 1Rules Amended and Effective October 1, 2013. Fee Schedule Amended and Effective June 1, 2010.

CommercialIncluding Procedures for Large, Complex Commercial Disputes

Arbitration Rules and Mediation Procedures

Rules Amended and Effective October 1, 2013 Fee Schedule Amended and Effective June 1, 2010

Available online at adr.org/commercial

RULES AND MEDIATION PROCEDURES American Arbitration Association2

Jeffrey GarciaVice PresidentPhone: 559.490.1860 Email: [email protected] cases in: AK, AZ, CA, HI, ID, MT, NV, NM, OR, UT, WA John M. BishopVice PresidentPhone: 404.320.5150 Email: [email protected] cases in: AL, DC, FL, GA, IN, KY, MD, NC, OH, SC, TN, VA

Harry HernandezDirectorPhone: 972.702.8222Email: [email protected] cases in: AR, CO, IL, IA, KS, LA, MN, MS, MO, NE, ND, OK, SD, TX, WI, WY

Yvonne Baglini DirectorPhone: 866.293.4053 Email: [email protected] cases in: CT, DE, ME, MA, MI, NH, NY, NJ, PA, RI, VT, WV

Case Management Vice Presidents and Directors

States: Alabama, Georgia John M. BishopVice President Phone: 404.320.5150Email: [email protected]

States: Florida Rebecca Storrow, PhD. Vice PresidentPhone: 954.372.4341Email: [email protected]

States: Arkansas, Illinois, Iowa, Michigan, Minnesota, Missouri, North Dakota, South Dakota, Wisconsin A. Kelly Turner, Esq.Vice PresidentPhone: 312.361.1116Email: [email protected]

States: Arizona, Idaho, Montana, Nevada, New Mexico, UtahDavid CoxVice PresidentPhone: 602.734.9304Email: [email protected]

States: Alaska, California, Hawaii, Oregon, WashingtonSerena Lee, Esq.Vice PresidentPhone: 415.671.4053Email: [email protected]

States: Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, VirginiaP. Jean Baker, Esq.Vice PresidentPhone: 202.223.7093Email: [email protected]

States: Colorado, Kansas, Nebraska, Oklahoma, WyomingLance TanakaVice PresidentPhone: 303.831.0824Email: [email protected] States: Louisiana, Mississippi, TexasAndrew BartonVice PresidentPhone: 210.998.5750Email: [email protected]

States: Indiana, Kentucky, North Carolina, Ohio, South Carolina, Tennessee, West VirginiaMichelle SkipperVice PresidentPhone: 704.643.8605Email: [email protected]

States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, VermontKaren JalkutVice PresidentPhone: 617.695.6062Email: [email protected]

States: New YorkJeffrey T. Zaino, Esq.Vice PresidentPhone: 212.484.3224Email: [email protected]

Regional Vice Presidents


Table of Contents Important Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Standard Arbitration Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Large, Complex Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Commercial Arbitration Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

R-1. Agreement of Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

R-2. AAA and Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

R-3. National Roster of Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

R-4. Filing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

R-5. Answers and Counterclaims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

R-6. Changes of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

R-7. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

R-8. Interpretation and Application of Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

R-9. Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

R-10. Administrative Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

R-11. Fixing of Locale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

R-12. Appointment from National Roster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

R-13. Direct Appointment by a Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

R-14. Appointment of Chairperson by Party-Appointed Arbitrators or Parties . . . . . . . . 16

R-15. Nationality of Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

R-16. Number of Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

R-17. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

R-18. Disqualification of Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

R-19. Communication with Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

R-20. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

R-21. Preliminary Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

R-22. Pre-Hearing Exchange and Production of Information . . . . . . . . . . . . . . . . . . . . . . 19

R-23. Enforcement Powers of the Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

R-24. Date, Time, and Place of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

R-25. Attendance at Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20


R-26. Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

R-27. Oaths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

R-28. Stenographic Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

R-29. Interpreters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

R-30. Postponements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

R-31. Arbitration in the Absence of a Party or Representative . . . . . . . . . . . . . . . . . . . . . 21

R-32. Conduct of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

R-33. Dispositive Motions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

R-34. Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

R-35. Evidence by Written Statements and Post-Hearing Filing of Documents or Other Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

R-36. Inspection or Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

R-37. Interim Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

R-38. Emergency Measures of Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

R-39. Closing of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

R-40. Reopening of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

R-41. Waiver of Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

R-42. Extensions of Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

R-43. Serving of Notice and Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

R-44. Majority Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

R-45. Time of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

R-46. Form of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

R-47. Scope of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

R-48. Award Upon Settlement – Consent Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

R-49. Delivery of Award to Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

R-50. Modification of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

R-51. Release of Documents for Judicial Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

R-52. Applications to Court and Exclusion of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

R-53. Administrative Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

R-54. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

R-55. Neutral Arbitrator’s Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

R-56. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

R-57. Remedies for Nonpayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

R-58. Sanctions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30


Preliminary Hearing Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

P-1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

P-2. Checklist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Expedited Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

E-1. Limitation on Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

E-2. Changes of Claim or Counterclaim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

E-3. Serving of Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

E-4. Appointment and Qualifications of Arbitrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

E-5. Exchange of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

E-6. Proceedings on Documents and Procedures for the Resolution of Disputes

Through Document Submission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

E-7. Date, Time, and Place of Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

E-8. The Hearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

E-9. Time of Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

E-10. Arbitrator’s Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Procedures for Large, Complex Commercial Disputes . . . . . . . . . . . . . . . . . . . . . . . . 36

L-1. Administrative Conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

L-2. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

L-3. Management of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Administrative Fee Schedules (Standard And Flexible Fees) . . . . . . . . . . . . . . . . . . . 38

Standard Fee Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Refund Schedule for Standard Fee Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Flexible Fee Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Hearing Room Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44


Commercial Mediation Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

M-1. Agreement of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

M-2. Initiation of Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

M-3. Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

M-4. Appointment of the Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

M-5. Mediator’s Impartiality and Duty to Disclose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

M-6. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

M-7. Duties and Responsibilities of the Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

M-8. Responsibilities of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

M-9. Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

M-10. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

M-11. No Stenographic Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

M-12. Termination of Mediation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

M-13. Exclusion of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

M-14. Interpretation and Application of Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

M-15. Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

M-16. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

M-17. Cost of the Mediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Conference Room Rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50


Important Notice

These rules and any amendment of them shall apply in the form in effect at the time the administrative filing requirements are met for a demand for arbitration or submission agreement received by the AAA®. To ensure that you have the most current information, see our web site at www.adr.org.

Introduction

Each year, many millions of business transactions take place. Occasionally, disagreements develop over these business transactions. Many of these disputes are resolved by arbitration, the voluntary submission of a dispute to an impartial person or persons for final and binding determination. Arbitration has proven to be an effective way to resolve these disputes privately, promptly, and economically.

The American Arbitration Association® (AAA), a not-for-profit, public service organization, offers a broad range of dispute resolution services to business executives, attorneys, individuals, trade associations, unions, management, consumers, families, communities, and all levels of government. Services are available through AAA headquarters in New York and through offices located in major cities throughout the United States. Hearings may be held at locations convenient for the parties and are not limited to cities with AAA offices. In addition, the AAA serves as a center for education and training, issues specialized publications, and conducts research on various forms of alternative dispute resolution.

Commercial Arbitration Rules and Mediation Procedures (Including Procedures for Large, Complex Commercial Disputes)


Standard Arbitration Clause

The parties can provide for arbitration of future disputes by inserting the following clause into their contracts:

Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

Arbitration of existing disputes may be accomplished by use of the following:

We, the undersigned parties, hereby agree to submit to arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules the following Controversy: (describe briefly). We further agree that the above controversy be submitted to (one) (three) arbitrator(s). We further agree that we will faithfully observe this agreement and the rules, that we will abide by and perform any award rendered by the arbitrator(s), and that a judgment of any court having jurisdiction may be entered on the award.

The services of the AAA are generally concluded with the transmittal of the award. Although there is voluntary compliance with the majority of awards, judgment on the award can be entered in a court having appropriate jurisdiction if necessary.

Administrative Fees

The AAA charges a filing fee based on the amount of the claim or counterclaim. This fee information, which is included with these rules, allows the parties to exercise control over their administrative fees. The fees cover AAA administrative services; they do not cover arbitrator compensation or expenses, if any, reporting services, or any post-award charges incurred by the parties in enforcing the award.

Mediation

Subject to the right of any party to opt out, in cases where a claim or counterclaim exceeds $75,000, the rules provide that the parties shall mediate their dispute upon the administration of the arbitration or at any time when the arbitration is pending. In mediation, the neutral mediator assists the parties in reaching a settlement but does not have the authority to make a binding decision or award. Mediation is administered by the AAA in accordance with its Commercial


Mediation Procedures. There is no additional filing fee where parties to a pending arbitration attempt to mediate their dispute under the AAA’s auspices.

Although these rules include a mediation procedure that will apply to many cases, parties may still want to incorporate mediation into their contractual dispute settlement process. Parties can do so by inserting the following mediation clause into their contract in conjunction with a standard arbitration provision:

If a dispute arises out of or relates to this contract, or the breach thereof, and if the dispute cannot be settled through negotiation, the parties agree first to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration, litigation, or some other dispute resolution procedure.

If the parties want to use a mediator to resolve an existing dispute, they can enter into the following submission agreement:

The parties hereby submit the following dispute to mediation administered by the American Arbitration Association under its Commercial Mediation Procedures. (The clause may also provide for the qualifications of the mediator(s), method of payment, locale of meetings, and any other item of concern to the parties.)

Large, Complex Cases

Unless the parties agree otherwise, the procedures for Large, Complex Commercial Disputes, which appear in this pamphlet, will be applied to all cases administered by the AAA under the Commercial Arbitration Rules in which the disclosed claim or counterclaim of any party is at least $500,000 exclusive of claimed interest, arbitration fees and costs. The key features of these procedures include:

> A highly qualified, trained Roster of Neutrals;

> A mandatory preliminary hearing with the arbitrators, which may be conducted by teleconference;

> Broad arbitrator authority to order and control the exchange of information, including depositions;

> A presumption that hearings will proceed on a consecutive or block basis.


Commercial Arbitration Rules

R-1. Agreement of Parties*+

(a) The parties shall be deemed to have made these rules a part of their arbitration agreement whenever they have provided for arbitration by the American Arbitration Association (hereinafter AAA) under its Commercial Arbitration Rules or for arbitration by the AAA of a domestic commercial dispute without specifying particular rules. These rules and any amendment of them shall apply in the form in effect at the time the administrative requirements are met for a Demand for Arbitration or Submission Agreement received by the AAA. Any disputes regarding which AAA rules shall apply shall be decided by the AAA. The parties, by written agreement, may vary the procedures set forth in these rules. After appointment of the arbitrator, such modifications may be made only with the consent of the arbitrator.

(b) Unless the parties or the AAA determines otherwise, the Expedited Procedures shall apply in any case in which no disclosed claim or counterclaim exceeds $75,000, exclusive of interest, attorneys’ fees, and arbitration fees and costs.

Parties may also agree to use these procedures in larger cases. Unless the parties agree otherwise, these procedures will not apply in cases involving more than two parties. The Expedited Procedures shall be applied as described in Sections E-1 through E-10 of these rules, in addition to any other portion of these rules that is not in conflict with the Expedited Procedures.

(c) Unless the parties agree otherwise, the Procedures for Large, Complex Commercial Disputes shall apply to all cases in which the disclosed claim or counterclaim of any party is at least $500,000 or more, exclusive of claimed interest, attorneys’ fees, arbitration fees and costs. Parties may also agree to use the procedures in cases involving claims or counterclaims under $500,000, or in nonmonetary cases. The Procedures for Large, Complex Commercial Disputes shall be applied as described in Sections L-1 through L-3 of these rules, in addition to any other portion of these rules that is not in conflict with the Procedures for Large, Complex Commercial Disputes.

(d) Parties may, by agreement, apply the Expedited Procedures, the Procedures for Large, Complex Commercial Disputes, or the Procedures for the Resolution of Disputes through Document Submission (Rule E-6) to any dispute.

(e) All other cases shall be administered in accordance with Sections R-1 through R-58 of these rules.

* The AAA applies the Supplementary Procedures for Consumer-Related Disputes to arbitration clauses in agreements between individual consumers and businesses where the business has a standardized, systematic application of arbitration clauses with customers and where the terms and conditions of the purchase of standardized, consumable goods or services are non-negotiable or primarily non-negotiable in most or all of its terms, conditions, features, or choices. The product or service must be for personal or household use. The AAA will have the discretion to apply or not to apply the supplementary procedures and the parties will be able to bring any disputes concerning the application or non-application to the attention of the arbitrator. Consumers are not prohibited from seeking relief in a small claims court for disputes or claims within the scope of its jurisdiction, even in consumer arbitration cases filed by the business.

+ A dispute arising out of an employer promulgated plan will be administered under the AAA’s Employment Arbitration Rules and Mediation Procedures.


R-2. AAA and Delegation of Duties When parties agree to arbitrate under these rules, or when they provide for arbitration by the AAA and an arbitration is initiated under these rules, they thereby authorize the AAA to administer the arbitration. The authority and duties of the AAA are prescribed in the agreement of the parties and in these rules, and may be carried out through such of the AAA’s representatives as it may direct. TheAAA may, in its discretion, assign the administration of an arbitration to any of its offices. Arbitrations administered under these rules shall only be administered by the AAA or by an individual or organization authorized by the AAA to do so.

R-3. National Roster of Arbitrators

The AAA shall establish and maintain a National Roster of Arbitrators (“National Roster”) and shall appoint arbitrators as provided in these rules. The term “arbitrator” in these rules refers to the arbitration panel, constituted for a particular case, whether composed of one or more arbitrators, or to an individual arbitrator, as the context requires.

R-4. Filing Requirements

(a) Arbitration under an arbitration provision in a contract shall be initiated by the initiating party (“claimant”) filing with the AAA a Demand for Arbitration, the administrative filing fee, and a copy of the applicable arbitration agreement from the parties’ contract which provides for arbitration.

(b) Arbitration pursuant to a court order shall be initiated by the initiating party filing with the AAA a Demand for Arbitration, the administrative filing fee, and a copy of any applicable arbitration agreement from the parties’ contract which provides for arbitration.

i. The filing party shall include a copy of the court order.

ii. The filing fee must be paid before a matter is considered properly filed. If the court order directs that a specific party is responsible for the filing fee, it is the responsibility of the filing party to either make such payment to the AAA and seek reimbursement as directed in the court order or to make other such arrangements so that the filing fee is submitted to the AAA with the Demand.

iii. The party filing the Demand with the AAA is the claimant and the opposing party is the respondent regardless of which party initiated the court action. Parties may request that the arbitrator alter the order of proceedings if necessary pursuant to R-32.

(c) It is the responsibility of the filing party to ensure that any conditions precedent to the filing of a case are met prior to filing for an arbitration, as well as any time requirements associated with the filing. Any dispute regarding whether a condition precedent has been met may be raised to the arbitrator for determination.


(d) Parties to any existing dispute who have not previously agreed to use these rules may commence an arbitration under these rules by filing a written submission agreement and the administrative filing fee. To the extent that the parties’ submission agreement contains any variances from these rules, such variances should be clearly stated in the Submission Agreement.

(e) Information to be included with any arbitration filing includes:

i. the name of each party;

ii. the address for each party, including telephone and fax numbers and e-mail addresses;

iii. if applicable, the names, addresses, telephone and fax numbers, and e-mail addresses of any known representative for each party;

iv. a statement setting forth the nature of the claim including the relief sought and the amount involved; and

v. the locale requested if the arbitration agreement does not specify one.

(f) The initiating party may file or submit a dispute to the AAA in the following manner:

i. through AAA WebFile, located at www.adr.org; or

ii. by filing the complete Demand or Submission with any AAA office, regardless of the intended locale of hearing.

(g) The filing party shall simultaneously provide a copy of the Demand and any supporting documents to the opposing party.

(h) The AAA shall provide notice to the parties (or their representatives if so named) of the receipt of a Demand or Submission when the administrative filing requirements have been satisfied. The date on which the filing requirements are satisfied shall establish the date of filing the dispute for administration. However, all disputes in connection with the AAA’s determination of the date of filing may be decided by the arbitrator.

(i) If the filing does not satisfy the filing requirements set forth above, the AAA shall acknowledge to all named parties receipt of the incomplete filing and inform the parties of the filing deficiencies. If the deficiencies are not cured by the date specified by the AAA, the filing may be returned to the initiating party.

R-5. Answers and Counterclaims

(a) A respondent may file an answering statement with the AAA within 14 calendar days after notice of the filing of the Demand is sent by the AAA. The respondent shall, at the time of any such filing, send a copy of any answering statement to the claimant and to all other parties to the arbitration. If no answering statement is filed within the stated time, the respondent will be deemed to deny the claim. Failure to file an answering statement shall not operate to delay the arbitration.


(b) A respondent may file a counterclaim at any time after notice of the filing of the Demand is sent by the AAA, subject to the limitations set forth in Rule R-6. The respondent shall send a copy of the counterclaim to the claimant and all other parties to the arbitration. If a counterclaim is asserted, it shall include a statement setting forth the nature of the counterclaim including the relief sought and the amount involved. The filing fee as specified in the applicable AAA Fee Schedule must be paid at the time of the filing of any counterclaim.

(c) If the respondent alleges that a different arbitration provision is controlling, the matter will be administered in accordance with the arbitration provision submitted by the initiating party subject to a final determination by the arbitrator.

(d) If the counterclaim does not meet the requirements for filing a claim and the deficiency is not cured by the date specified by the AAA, it may be returned to the filing party.

R-6. Changes of Claim

(a) A party may at any time prior to the close of the hearing or by the date established by the arbitrator increase or decrease the amount of its claim or counterclaim. Written notice of the change of claim amount must be provided to the AAA and all parties. If the change of claim amount results in an increase in administrative fee, the balance of the fee is due before the change of claim amount may be accepted by the arbitrator.

(b) Any new or different claim or counterclaim, as opposed to an increase or decrease in the amount of a pending claim or counterclaim, shall be made in writing and filed with the AAA, and a copy shall be provided to the other party, who shall have a period of 14 calendar days from the date of such transmittal within which to file an answer to the proposed change of claim or counterclaim with the AAA. After the arbitrator is appointed, however, no new or different claim may be submitted except with the arbitrator’s consent.

R-7. Jurisdiction

(a) The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.

(b) The arbitrator shall have the power to determine the existence or validity of a contract of which an arbitration clause forms a part. Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.

(c) A party must object to the jurisdiction of the arbitrator or to the arbitrability of a claim or counterclaim no later than the filing of the answering statement to the claim or counterclaim that gives rise to the objection. The arbitrator may rule on such objections as a preliminary matter or as part of the final award.


R-8. Interpretation and Application of Rules

The arbitrator shall interpret and apply these rules insofar as they relate to the arbitrator’s powers and duties. When there is more than one arbitrator and a difference arises among them concerning the meaning or application of these rules, it shall be decided by a majority vote. If that is not possible, either an arbitrator or a party may refer the question to the AAA for final decision. All other rules shall be interpreted and applied by the AAA.

R-9. Mediation

In all cases where a claim or counterclaim exceeds $75,000, upon the AAA’s administration of the arbitration or at any time while the arbitration is pending, the parties shall mediate their dispute pursuant to the applicable provisions of the AAA’s Commercial Mediation Procedures, or as otherwise agreed by the parties. Absent an agreement of the parties to the contrary, the mediation shall take place concurrently with the arbitration and shall not serve to delay the arbitration proceedings. However, any party to an arbitration may unilaterally opt out of this rule upon notification to the AAA and the other parties to the arbitration. The parties shall confirm the completion of any mediation or any decision to opt out of this rule to the AAA. Unless agreed to by all parties and the mediator, the mediator shall not be appointed as an arbitrator to the case.

R-10. Administrative Conference

At the request of any party or upon the AAA’s own initiative, the AAA may conduct an administrative conference, in person or by telephone, with the parties and/or their representatives. The conference may address such issues as arbitrator selection, mediation of the dispute, potential exchange of information, a timetable for hearings, and any other administrative matters.

R-11. Fixing of Locale

The parties may mutually agree on the locale where the arbitration is to be held. Any disputes regarding the locale that are to be decided by the AAA must be submitted to the AAA and all other parties within 14 calendar days from the date of the AAA’s initiation of the case or the date established by the AAA. Disputes regarding locale shall be determined in the following manner:

(a) When the parties’ arbitration agreement is silent with respect to locale, and if the parties disagree as to the locale, the AAA may initially determine the place of


arbitration, subject to the power of the arbitrator after appointment, to make a final determination on the locale.

(b) When the parties’ arbitration agreement requires a specific locale, absent the parties’ agreement to change it, or a determination by the arbitrator upon appointment that applicable law requires a different locale, the locale shall be that specified in the arbitration agreement.

(c) If the reference to a locale in the arbitration agreement is ambiguous, and the parties are unable to agree to a specific locale, the AAA shall determine the locale, subject to the power of the arbitrator to finally determine the locale.

The arbitrator, at the arbitrator’s sole discretion, shall have the authority to conduct special hearings for document production purposes or otherwise at other locations if reasonably necessary and beneficial to the process.

R-12. Appointment from National Roster

If the parties have not appointed an arbitrator and have not provided any other method of appointment, the arbitrator shall be appointed in the following manner:

(a) The AAA shall send simultaneously to each party to the dispute an identical list of 10 (unless the AAA decides that a different number is appropriate) names of persons chosen from the National Roster. The parties are encouraged to agree to an arbitrator from the submitted list and to advise the AAA of their agreement.

(b) If the parties are unable to agree upon an arbitrator, each party to the dispute shall have 14 calendar days from the transmittal date in which to strike names objected to, number the remaining names in order of preference, and return the list to the AAA. The parties are not required to exchange selection lists. If a party does not return the list within the time specified, all persons named therein shall be deemed acceptable to that party. From among the persons who have been approved on both lists, and in accordance with the designated order of mutual preference, the AAA shall invite the acceptance of an arbitrator to serve. If the parties fail to agree on any of the persons named, or if acceptable arbitrators are unable to act, or if for any other reason the appointment cannot be made from the submitted lists, the AAA shall have the power to make the appointment from among other members of the National Roster without the submission of additional lists.

(c) Unless the parties agree otherwise, when there are two or more claimants or two or more respondents, the AAA may appoint all the arbitrators.


R-13. Direct Appointment by a Party

(a) If the agreement of the parties names an arbitrator or specifies a method of appointing an arbitrator, that designation or method shall be followed. The notice of appointment, with the name and address of the arbitrator, shall be filed with the AAA by the appointing party. Upon the request of any appointing party, the AAA shall submit a list of members of the National Roster from which the party may, if it so desires, make the appointment.

(b) Where the parties have agreed that each party is to name one arbitrator, the arbitrators so named must meet the standards of Section R-18 with respect to impartiality and independence unless the parties have specifically agreed pursuant to Section R-18(b) that the party-appointed arbitrators are to be non-neutral and need not meet those standards.

(c) If the agreement specifies a period of time within which an arbitrator shall be appointed and any party fails to make the appointment within that period, the AAA shall make the appointment.

(d) If no period of time is specified in the agreement, the AAA shall notify the party to make the appointment. If within 14 calendar days after such notice has been sent, an arbitrator has not been appointed by a party, the AAA shall make the appointment.

R-14. Appointment of Chairperson by Party-Appointed Arbitrators or Parties

(a) If, pursuant to Section R-13, either the parties have directly appointed arbitrators, or the arbitrators have been appointed by the AAA, and the parties have authorized them to appoint a chairperson within a specified time and no appointment is made within that time or any agreed extension, the AAA may appoint the chairperson.

(b) If no period of time is specified for appointment of the chairperson, and the party-appointed arbitrators or the parties do not make the appointment within 14 calendar days from the date of the appointment of the last party-appointed arbitrator, the AAA may appoint the chairperson.

(c) If the parties have agreed that their party-appointed arbitrators shall appoint the chairperson from the National Roster, the AAA shall furnish to the party-appointed arbitrators, in the manner provided in Section R-12, a list selected from the National Roster, and the appointment of the chairperson shall be made as provided in that Section.

R-15. Nationality of Arbitrator

Where the parties are nationals of different countries, the AAA, at the request of any party or on its own initiative, may appoint as arbitrator a national of a country other than that of any of the parties. The request must be made before the time set for the appointment of the arbitrator as agreed by the parties or set by these rules.


R-16. Number of Arbitrators

(a) If the arbitration agreement does not specify the number of arbitrators, the dispute shall be heard and determined by one arbitrator, unless the AAA, in its discretion, directs that three arbitrators be appointed. A party may request three arbitrators in the Demand or Answer, which request the AAA will consider in exercising its discretion regarding the number of arbitrators appointed to the dispute.

(b) Any request for a change in the number of arbitrators as a result of an increase or decrease in the amount of a claim or a new or different claim must be made to the AAA and other parties to the arbitration no later than seven calendar days after receipt of the R-6 required notice of change of claim amount. If the parties are unable to agree with respect to the request for a change in the number of arbitrators, the AAA shall make that determination.

R-17. Disclosure

(a) Any person appointed or to be appointed as an arbitrator, as well as the parties and their representatives, shall disclose to the AAA any circumstance likely to give rise to justifiable doubt as to the arbitrator’s impartiality or independence, including any bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their representatives. Such obligation shall remain in effect throughout the arbitration. Failure on the part of a party or a representative to comply with the requirements of this rule may result in the waiver of the right to object to an arbitrator in accordance with Rule R-41.

(b) Upon receipt of such information from the arbitrator or another source, the AAA shall communicate the information to the parties and, if it deems it appropriate to do so, to the arbitrator and others.

(c) Disclosure of information pursuant to this Section R-17 is not an indication that the arbitrator considers that the disclosed circumstance is likely to affect impartiality or independence.

R-18. Disqualification of Arbitrator

(a) Any arbitrator shall be impartial and independent and shall perform his or her duties with diligence and in good faith, and shall be subject to disqualification for:

i. partiality or lack of independence,

ii. inability or refusal to perform his or her duties with diligence and in good faith, and

iii. any grounds for disqualification provided by applicable law.

(b) The parties may agree in writing, however, that arbitrators directly appointed by a party pursuant to Section R-13 shall be non-neutral, in which case such arbitrators need not be impartial or independent and shall not be subject to disqualification for partiality or lack of independence.


(c) Upon objection of a party to the continued service of an arbitrator, or on its own initiative, the AAA shall determine whether the arbitrator should be disqualified under the grounds set out above, and shall inform the parties of its decision, which decision shall be conclusive.

R-19. Communication with Arbitrator

(a) No party and no one acting on behalf of any party shall communicate ex parte with an arbitrator or a candidate for arbitrator concerning the arbitration, except that a party, or someone acting on behalf of a party, may communicate ex parte with a candidate for direct appointment pursuant to R-13 in order to advise the candidate of the general nature of the controversy and of the anticipated proceedings and to discuss the candidate’s qualifications, availability, or independence in relation to the parties or to discuss the suitability of candidates for selection as a third arbitrator where the parties or party-designated arbitrators are to participate in that selection.

(b) Section R-19(a) does not apply to arbitrators directly appointed by the parties who, pursuant to Section R-18(b), the parties have agreed in writing are non-neutral. Where the parties have so agreed under Section R-18(b), the AAA shall as an administrative practice suggest to the parties that they agree further that Section R-19(a) should nonetheless apply prospectively.

(c) In the course of administering an arbitration, the AAA may initiate communications with each party or anyone acting on behalf of the parties either jointly or individually.

(d) As set forth in R-43, unless otherwise instructed by the AAA or by the arbitrator, any documents submitted by any party or to the arbitrator shall simultaneously be provided to the other party or parties to the arbitration.

R-20. Vacancies

(a) If for any reason an arbitrator is unable or unwilling to perform the duties of the office, the AAA may, on proof satisfactory to it, declare the office vacant. Vacancies shall be filled in accordance with the applicable provisions of these rules.

(b) In the event of a vacancy in a panel of neutral arbitrators after the hearings have commenced, the remaining arbitrator or arbitrators may continue with the hearing and determination of the controversy, unless the parties agree otherwise.

(c) In the event of the appointment of a substitute arbitrator, the panel of arbitrators shall determine in its sole discretion whether it is necessary to repeat all or part of any prior hearings.

R-21. Preliminary Hearing

(a) At the discretion of the arbitrator, and depending on the size and complexity of the arbitration, a preliminary hearing should be scheduled as soon as practicable after the arbitrator has been appointed. The parties should be invited to attend the preliminary hearing along with their representatives. The preliminary hearing may be conducted in person or by telephone.


(b) At the preliminary hearing, the parties and the arbitrator should be prepared to discuss and establish a procedure for the conduct of the arbitration that is appropriate to achieve a fair, efficient, and economical resolution of the dispute. Sections P-1 and P-2 of these rules address the issues to be considered at the preliminary hearing.

R-22. Pre-Hearing Exchange and Production of Information (a) Authority of arbitrator. The arbitrator shall manage any necessary exchange of information among the parties with a view to achieving an efficient and economical resolution of the dispute, while at the same time promoting equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.

(b) Documents. The arbitrator may, on application of a party or on the arbitrator’s own initiative:

i. require the parties to exchange documents in their possession or custody on which they intend to rely;

ii. require the parties to update their exchanges of the documents on which they intend to rely as such documents become known to them;

iii. require the parties, in response to reasonable document requests, to make available to the other party documents, in the responding party’s possession or custody, not otherwise readily available to the party seeking the documents, reasonably believed by the party seeking the documents to exist and to be relevant and material to the outcome of disputed issues; and

iv. require the parties, when documents to be exchanged or produced are maintained in electronic form, to make such documents available in the form most convenient and economical for the party in possession of such documents, unless the arbitrator determines that there is good cause for requiring the documents to be produced in a different form. The parties should attempt to agree in advance upon, and the arbitrator may determine, reasonable search parameters to balance the need for production of electronically stored documents relevant and material to the outcome of disputed issues against the cost of locating and producing them.

R-23. Enforcement Powers of the Arbitrator

The arbitrator shall have the authority to issue any orders necessary to enforce the provisions of rules R-21 and R-22 and to otherwise achieve a fair, efficient and economical resolution of the case, including, without limitation:

(a) conditioning any exchange or production of confidential documents and information, and the admission of confidential evidence at the hearing, on appropriate orders to preserve such confidentiality;

(b) imposing reasonable search parameters for electronic and other documents if the parties are unable to agree;


(c) allocating costs of producing documentation, including electronically stored documentation;

(d) in the case of willful non-compliance with any order issued by the arbitrator, drawing adverse inferences, excluding evidence and other submissions, and/or making special allocations of costs or an interim award of costs arising from such non-compliance; and

(e) issuing any other enforcement orders which the arbitrator is empowered to issue under applicable law.

R-24. Date, Time, and Place of Hearing

The arbitrator shall set the date, time, and place for each hearing. The parties shall respond to requests for hearing dates in a timely manner, be cooperative in scheduling the earliest practicable date, and adhere to the established hearing schedule. The AAA shall send a notice of hearing to the parties at least 10 calendar days in advance of the hearing date, unless otherwise agreed by the parties.

R-25. Attendance at Hearings

The arbitrator and the AAA shall maintain the privacy of the hearings unless the law provides to the contrary. Any person having a direct interest in the arbitration is entitled to attend hearings. The arbitrator shall otherwise have the power to require the exclusion of any witness, other than a party or other essential person, during the testimony of any other witness. It shall be discretionary with the arbitrator to determine the propriety of the attendance of any other person.

R-26. Representation

Any party may participate without representation (pro se), or by counsel or any other representative of the party’s choosing, unless such choice is prohibited by applicable law. A party intending to be so represented shall notify the other party and the AAA of the name, telephone number and address, and email address if available, of the representative at least seven calendar days prior to the date set for the hearing at which that person is first to appear. When such a representative initiates an arbitration or responds for a party, notice is deemed to have been given.


R-27. Oaths

Before proceeding with the first hearing, each arbitrator may take an oath of office and, if required by law, shall do so. The arbitrator may require witnesses to testify under oath administered by any duly qualified person and, if it is required by law or requested by any party, shall do so.

R-28. Stenographic Record

(a) Any party desiring a stenographic record shall make arrangements directly with a stenographer and shall notify the other parties of these arrangements at least three calendar days in advance of the hearing. The requesting party or parties shall pay the cost of the record.

(b) No other means of recording the proceedings will be permitted absent the agreement of the parties or per the direction of the arbitrator.

(c) If the transcript or any other recording is agreed by the parties or determined by the arbitrator to be the official record of the proceeding, it must be provided to the arbitrator and made available to the other parties for inspection, at a date, time, and place determined by the arbitrator.

(d) The arbitrator may resolve any disputes with regard to apportionment of the costs of the stenographic record or other recording.

R-29. Interpreters

Any party wishing an interpreter shall make all arrangements directly with the interpreter and shall assume the costs of the service.

R-30. Postponements

The arbitrator may postpone any hearing upon agreement of the parties, upon request of a party for good cause shown, or upon the arbitrator’s own initiative.

R-31. Arbitration in the Absence of a Party or Representative

Unless the law provides to the contrary, the arbitration may proceed in the absence of any party or representative who, after due notice, fails to be present or fails to obtain a postponement. An award shall not be made solely on the default of a party. The arbitrator shall require the party who is present to submit such evidence as the arbitrator may require for the making of an award.


R-32. Conduct of Proceedings (a) The claimant shall present evidence to support its claim. The respondent shall then present evidence to support its defense. Witnesses for each party shall also submit to questions from the arbitrator and the adverse party. The arbitrator has the discretion to vary this procedure, provided that the parties are treated with equality and that each party has the right to be heard and is given a fair opportunity to present its case.

(b) The arbitrator, exercising his or her discretion, shall conduct the proceedings with a view to expediting the resolution of the dispute and may direct the order of proof, bifurcate proceedings and direct the parties to focus their presentations on issues the decision of which could dispose of all or part of the case.

(c) When deemed appropriate, the arbitrator may also allow for the presentation of evidence by alternative means including video conferencing, internet communication, telephonic conferences and means other than an in-person presentation. Such alternative means must afford a full opportunity for all parties to present any evidence that the arbitrator deems material and relevant to the resolution of the dispute and, when involving witnesses, provide an opportunity for cross-examination.

(d) The parties may agree to waive oral hearings in any case and may also agree to utilize the Procedures for Resolution of Disputes Through Document Submission, found in Rule E-6.

R-33. Dispositive Motions

The arbitrator may allow the filing of and make rulings upon a dispositive motion only if the arbitrator determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.

R-34. Evidence

(a) The parties may offer such evidence as is relevant and material to the dispute and shall produce such evidence as the arbitrator may deem necessary to an understanding and determination of the dispute. Conformity to legal rules of evidence shall not be necessary. All evidence shall be taken in the presence of all of the arbitrators and all of the parties, except where any of the parties is absent, in default, or has waived the right to be present.

(b) The arbitrator shall determine the admissibility, relevance, and materiality of the evidence offered and may exclude evidence deemed by the arbitrator to be cumulative or irrelevant.

(c) The arbitrator shall take into account applicable principles of legal privilege, such as those involving the confidentiality of communications between a lawyer and client.

(d) An arbitrator or other person authorized by law to subpoena witnesses or documents may do so upon the request of any party or independently.


R-35. Evidence by Written Statements and Post-Hearing Filing of Documents or Other Evidence

(a) At a date agreed upon by the parties or ordered by the arbitrator, the parties shall give written notice for any witness or expert witness who has provided a written witness statement to appear in person at the arbitration hearing for examination. If such notice is given, and the witness fails to appear, the arbitrator may disregard the written witness statement and/or expert report of the witness or make such other order as the arbitrator may consider to be just and reasonable.

(b) If a witness whose testimony is represented by a party to be essential is unable or unwilling to testify at the hearing, either in person or through electronic or other means, either party may request that the arbitrator order the witness to appear in person for examination before the arbitrator at a time and location where the witness is willing and able to appear voluntarily or can legally be compelled to do so. Any such order may be conditioned upon payment by the requesting party of all reasonable costs associated with such examination.

(c) If the parties agree or the arbitrator directs that documents or other evidence be submitted to the arbitrator after the hearing, the documents or other evidence shall be filed with the AAA for transmission to the arbitrator. All parties shall be afforded an opportunity to examine and respond to such documents or other evidence.

R-36. Inspection or Investigation

An arbitrator finding it necessary to make an inspection or investigation in connection with the arbitration shall direct the AAA to so advise the parties. The arbitrator shall set the date and time and the AAA shall notify the parties. Any party who so desires may be present at such an inspection or investigation. In the event that one or all parties are not present at the inspection or investigation, the arbitrator shall make an oral or written report to the parties and afford them an opportunity to comment.

R-37. Interim Measures

(a) The arbitrator may take whatever interim measures he or she deems necessary, including injunctive relief and measures for the protection or conservation of property and disposition of perishable goods.

(b) Such interim measures may take the form of an interim award, and the arbitrator may require security for the costs of such measures.

(c) A request for interim measures addressed by a party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate.


R-38. Emergency Measures of Protection

(a) Unless the parties agree otherwise, the provisions of this rule shall apply to arbitrations conducted under arbitration clauses or agreements entered on or after October 1, 2013.

(b) A party in need of emergency relief prior to the constitution of the panel shall notify the AAA and all other parties in writing of the nature of the relief sought and the reasons why such relief is required on an emergency basis. The application shall also set forth the reasons why the party is entitled to such relief. Such notice may be given by facsimile or e-mail or other reliable means, but must include a statement certifying that all other parties have been notified or an explanation of the steps taken in good faith to notify other parties.

(c) Within one business day of receipt of notice as provided in section (b), the AAA shall appoint a single emergency arbitrator designated to rule on emergency applications. The emergency arbitrator shall immediately disclose any circumstance likely, on the basis of the facts disclosed on the application, to affect such arbitrator’s impartiality or independence. Any challenge to the appointment of the emergency arbitrator must be made within one business day of the communication by the AAA to the parties of the appointment of the emergency arbitrator and the circumstances disclosed.

(d) The emergency arbitrator shall as soon as possible, but in any event within two business days of appointment, establish a schedule for consideration of the application for emergency relief. Such a schedule shall provide a reasonable opportunity to all parties to be heard, but may provide for proceeding by telephone or video conference or on written submissions as alternatives to a formal hearing. The emergency arbitrator shall have the authority vested in the tribunal under Rule 7, including the authority to rule on her/his own jurisdiction, and shall resolve any disputes over the applicability of this Rule 38.

(e) If after consideration the emergency arbitrator is satisfied that the party seeking the emergency relief has shown that immediate and irreparable loss or damage shall result in the absence of emergency relief, and that such party is entitled to such relief, the emergency arbitrator may enter an interim order or award granting the relief and stating the reason therefore.

(f) Any application to modify an interim award of emergency relief must be based on changed circumstances and may be made to the emergency arbitrator until the panel is constituted; thereafter such a request shall be addressed to the panel. The emergency arbitrator shall have no further power to act after the panel is constituted unless the parties agree that the emergency arbitrator is named as a member of the panel.

(g) Any interim award of emergency relief may be conditioned on provision by the party seeking such relief for appropriate security.

(h) A request for interim measures addressed by a party to a judicial authority shall not be deemed incompatible with this rule, the agreement to arbitrate or a waiver of the right to arbitrate. If the AAA is directed by a judicial authority to nominate a special master to consider and report on an application for emergency relief, the AAA shall


proceed as provided in this rule and the references to the emergency arbitrator shall be read to mean the special master, except that the special master shall issue a report rather than an interim award.

(i) The costs associated with applications for emergency relief shall initially be apportioned by the emergency arbitrator or special master, subject to the power of the tribunal to determine finally the apportionment of such costs.

R-39. Closing of Hearing

(a) The arbitrator shall specifically inquire of all parties whether they have any further proofs to offer or witnesses to be heard. Upon receiving negative replies or if satisfied that the record is complete, the arbitrator shall declare the hearing closed.

(b) If documents or responses are to be filed as provided in Rule R-35, or if briefs are to be filed, the hearing shall be declared closed as of the final date set by the arbitrator for the receipt of briefs. If no documents, responses, or briefs are to be filed, the arbitrator shall declare the hearings closed as of the date of the last hearing (including telephonic hearings). If the case was heard without any oral hearings, the arbitrator shall close the hearings upon the due date established for receipt of the final submission.

(c) The time limit within which the arbitrator is required to make the award shall commence, in the absence of other agreements by the parties, upon the closing of the hearing. The AAA may extend the time limit for rendering of the award only in unusual and extreme circumstances.

R-40. Reopening of Hearing

The hearing may be reopened on the arbitrator’s initiative, or by the direction of the arbitrator upon application of a party, at any time before the award is made. If reopening the hearing would prevent the making of the award within the specific time agreed to by the parties in the arbitration agreement, the matter may not be reopened unless the parties agree to an extension of time. When no specific date is fixed by agreement of the parties , the arbitrator shall have 30 calendar days from the closing of the reopened hearing within which to make an award (14 calendar days if the case is governed by the Expedited Procedures).

R-41. Waiver of Rules

Any party who proceeds with the arbitration after knowledge that any provision or requirement of these rules has not been complied with and who fails to state an objection in writing shall be deemed to have waived the right to object.


R-42. Extensions of Time

The parties may modify any period of time by mutual agreement. The AAA or the arbitrator may for good cause extend any period of time established by these rules, except the time for making the award. The AAA shall notify the parties of any extension.

R-43. Serving of Notice and Communications (a) Any papers, notices, or process necessary or proper for the initiation or continuation of an arbitration under these rules, for any court action in connection therewith, or for the entry of judgment on any award made under these rules may be served on a party by mail addressed to the party or its representative at the last known address or by personal service, in or outside the state where the arbitration is to be held, provided that reasonable opportunity to be heard with regard to the dispute is or has been granted to the party.

(b) The AAA, the arbitrator and the parties may also use overnight delivery or electronic facsimile transmission (fax), or electronic (e-mail) to give the notices required by these rules. Where all parties and the arbitrator agree, notices may be transmitted by e-mail or other methods of communication.

(c) Unless otherwise instructed by the AAA or by the arbitrator, any documents submitted by any party to the AAA or to the arbitrator shall simultaneously be provided to the other party or parties to the arbitration.

(d) Unless otherwise instructed by the AAA or by the arbitrator, all written communications made by any party to the AAA or to the arbitrator shall simultaneously be provided to the other party or parties to the arbitration.

(e) Failure to provide the other party with copies of communications made to the AAA or to the arbitrator may prevent the AAA or the arbitrator from acting on any requests or objections contained therein.

(f) The AAA may direct that any oral or written communications that are sent by a party or their representative shall be sent in a particular manner. The failure of a party or their representative to do so may result in the AAA’s refusal to consider the issue raised in the communication.

R-44. Majority Decision

(a) When the panel consists of more than one arbitrator, unless required by law or by the arbitration agreement or section (b) of this rule, a majority of the arbitrators must make all decisions.

(b) Where there is a panel of three arbitrators, absent an objection of a party or another member of the panel, the chairperson of the panel is authorized to resolve any disputes related to the exchange of information or procedural matters without the need to consult the full panel.


R-45. Time of Award

The award shall be made promptly by the arbitrator and, unless otherwise agreed by the parties or specified by law, no later than 30 calendar days from the date of closing the hearing, or, if oral hearings have been waived, from the due date set for receipt of the parties’ final statements and proofs.

R-46. Form of Award

(a) Any award shall be in writing and signed by a majority of the arbitrators. It shall be executed in the form and manner required by law.

(b) The arbitrator need not render a reasoned award unless the parties request such an award in writing prior to appointment of the arbitrator or unless the arbitrator determines that a reasoned award is appropriate.

R-47. Scope of Award

(a) The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties, including, but not limited to, specific performance of a contract.

(b) In addition to a final award, the arbitrator may make other decisions, including interim, interlocutory, or partial rulings, orders, and awards. In any interim, interlocutory, or partial award, the arbitrator may assess and apportion the fees, expenses, and compensation related to such award as the arbitrator determines is appropriate.

(c) In the final award, the arbitrator shall assess the fees, expenses, and compensation provided in Sections R-53, R-54, and R-55. The arbitrator may apportion such fees, expenses, and compensation among the parties in such amounts as the arbitrator determines is appropriate.

(d) The award of the arbitrator(s) may include:

i. interest at such rate and from such date as the arbitrator(s) may deem appropriate; and

ii. an award of attorneys’ fees if all parties have requested such an award or it is authorized by law or their arbitration agreement.

R-48. Award Upon Settlement – Consent Award

(a) If the parties settle their dispute during the course of the arbitration and if the parties so request, the arbitrator may set forth the terms of the settlement in a “consent award.” A consent award must include an allocation of arbitration costs, including administrative fees and expenses as well as arbitrator fees and expenses.

(b) The consent award shall not be released to the parties until all administrative fees and all arbitrator compensation have been paid in full.


R-49. Delivery of Award to Parties

Parties shall accept as notice and delivery of the award the placing of the award or a true copy thereof in the mail addressed to the parties or their representatives at their last known addresses, personal or electronic service of the award, or the filing of the award in any other manner that is permitted by law.

R-50. Modification of Award

Within 20 calendar days after the transmittal of an award, any party, upon notice to the other parties, may request the arbitrator, through the AAA, to correct any clerical, typographical, or computational errors in the award. The arbitrator is not empowered to redetermine the merits of any claim already decided. The other parties shall be given 10 calendar days to respond to the request. The arbitrator shall dispose of the request within 20 calendar days after transmittal by the AAA to the arbitrator of the request and any response thereto.

R-51. Release of Documents for Judicial Proceedings

The AAA shall, upon the written request of a party to the arbitration, furnish to the party, at its expense, copies or certified copies of any papers in the AAA’s possession that are not determined by the AAA to be privileged or confidential.

R-52. Applications to Court and Exclusion of Liability

(a) No judicial proceeding by a party relating to the subject matter of the arbitration shall be deemed a waiver of the party’s right to arbitrate.

(b) Neither the AAA nor any arbitrator in a proceeding under these rules is a necessary or proper party in judicial proceedings relating to the arbitration.

(c) Parties to an arbitration under these rules shall be deemed to have consented that judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof.

(d) Parties to an arbitration under these rules shall be deemed to have consented that neither the AAA nor any arbitrator shall be liable to any party in any action for damages or injunctive relief for any act or omission in connection with any arbitration under these rules.

(e) Parties to an arbitration under these rules may not call the arbitrator, the AAA, or AAA employees as a witness in litigation or any other proceeding relating to the arbitration. The arbitrator, the AAA and AAA employees are not competent to testify as witnesses in any such proceeding.


R-53. Administrative Fees

As a not-for-profit organization, the AAA shall prescribe administrative fees to compensate it for the cost of providing administrative services. The fees in effect when the fee or charge is incurred shall be applicable. The filing fee shall be advanced by the party or parties making a claim or counterclaim, subject to final apportionment by the arbitrator in the award. The AAA may, in the event ofextreme hardship on the part of any party, defer or reduce the administrative fees.

R-54. Expenses

The expenses of witnesses for either side shall be paid by the party producing such witnesses. All other expenses of the arbitration, including required travel and other expenses of the arbitrator, AAA representatives, and any witness and the cost of any proof produced at the direct request of the arbitrator, shall be borne equally by the parties, unless they agree otherwise or unless the arbitrator in the award assesses such expenses or any part thereof against any specified party or parties.

R-55. Neutral Arbitrator’s Compensation

(a) Arbitrators shall be compensated at a rate consistent with the arbitrator’s stated rate of compensation.

(b) If there is disagreement concerning the terms of compensation, an appropriate rate shall be established with the arbitrator by the AAA and confirmed to the parties.

(c) Any arrangement for the compensation of a neutral arbitrator shall be made through the AAA and not directly between the parties and the arbitrator.

R-56. Deposits

(a) The AAA may require the parties to deposit in advance of any hearings such sums of money as it deems necessary to cover the expense of the arbitration, including the arbitrator’s fee, if any, and shall render an accounting to the parties and return any unexpended balance at the conclusion of the case.

(b) Other than in cases where the arbitrator serves for a flat fee, deposit amounts requested will be based on estimates provided by the arbitrator. The arbitrator will determine the estimated amount of deposits using the information provided by the parties with respect to the complexity of each case.

(c) Upon the request of any party, the AAA shall request from the arbitrator an itemization or explanation for the arbitrator’s request for deposits.


R-57. Remedies for Nonpayment

If arbitrator compensation or administrative charges have not been paid in full, the AAA may so inform the parties in order that one of them may advance the required payment.

(a) Upon receipt of information from the AAA that payment for administrative charges or deposits for arbitrator compensation have not been paid in full, to the extent the law allows, a party may request that the arbitrator take specific measures relating to a party’s non-payment.

(b) Such measures may include, but are not limited to, limiting a party’s ability to assert or pursue their claim. In no event, however, shall a party be precluded from defending a claim or counterclaim.

(c) The arbitrator must provide the party opposing a request for such measures with the opportunity to respond prior to making any ruling regarding the same.

(d) In the event that the arbitrator grants any request for relief which limits any party’s participation in the arbitration, the arbitrator shall require the party who is making a claim and who has made appropriate payments to submit such evidence as the arbitrator may require for the making of an award.

(e) Upon receipt of information from the AAA that full payments have not been received, the arbitrator, on the arbitrator’s own initiative or at the request of the AAA or a party, may order the suspension of the arbitration. If no arbitrator has yet been appointed, the AAA may suspend the proceedings.

(f) If the arbitration has been suspended by either the AAA or the arbitrator and the parties have failed to make the full deposits requested within the time provided after the suspension, the arbitrator, or the AAA if an arbitrator has not been appointed, may terminate the proceedings.

R-58. Sanctions

(a) The arbitrator may, upon a party’s request, order appropriate sanctions where a party fails to comply with its obligations under these rules or with an order of the arbitrator. In the event that the arbitrator enters a sanction that limits any party’s participation in the arbitration or results in an adverse determination of an issue or issues, the arbitrator shall explain that order in writing and shall require the submission of evidence and legal argument prior to making of an award. The arbitrator may not enter a default award as a sanction.

(b) The arbitrator must provide a party that is subject to a sanction request with the opportunity to respond prior to making any determination regarding the sanctions application.


Preliminary Hearing Procedures

P-1. General

(a) In all but the simplest cases, holding a preliminary hearing as early in the process as possible will help the parties and the arbitrator organize the proceeding in a manner that will maximize efficiency and economy, and will provide each party a fair opportunity to present its case.

(b) Care must be taken to avoid importing procedures from court systems, as such procedures may not be appropriate to the conduct of arbitrations as an alternative form of dispute resolution that is designed to be simpler, less expensive and more expeditious.

P-2. Checklist

(a) The following checklist suggests subjects that the parties and the arbitrator should address at the preliminary hearing, in addition to any others that the parties or the arbitrator believe to be appropriate to the particular case. The items to be addressed in a particular case will depend on the size, subject matter, and complexity of the dispute, and are subject to the discretion of the arbitrator:

(i) the possibility of other non-adjudicative methods of dispute resolution, including mediation pursuant to R-9;

(ii) whether all necessary or appropriate parties are included in the arbitration;

(iii) whether a party will seek a more detailed statement of claims, counterclaims or defenses;

(iv) whether there are any anticipated amendments to the parties’ claims, counterclaims, or defenses;

(v) which:

(a) arbitration rules;

(b) procedural law; and

(c) substantive law govern the arbitration;

(vi) whether there are any threshold or dispositive issues that can efficiently be decided without considering the entire case, including without limitation:

(a) any preconditions that must be satisfied before proceeding with the arbitration;

(b) whether any claim or counterclaim falls outside the arbitrator’s jurisdiction or is otherwise not arbitrable;

(c) consolidation of the claims or counterclaims with another arbitration; or

(d) bifurcation of the proceeding.


(vii) whether the parties will exchange documents, including electronically stored documents, on which they intend to rely in the arbitration, and/or make written requests for production of documents within defined parameters;

(viii) whether to establish any additional procedures to obtain information that is relevant and material to the outcome of disputed issues;

(ix) how costs of any searches for requested information or documents that would result in substantial costs should be borne;

(x) whether any measures are required to protect confidential information;

(xi) whether the parties intend to present evidence from expert witnesses, and if so, whether to establish a schedule for the parties to identify their experts and exchange expert reports;

(xii) whether, according to a schedule set by the arbitrator, the parties will:

(a) identify all witnesses, the subject matter of their anticipated testimonies, exchange written witness statements, and determine whether written witness statements will replace direct testimony at the hearing;

(b) exchange and pre-mark documents that each party intends to submit; and

(c) exchange pre-hearing submissions, including exhibits;

(xiii) the date, time and place of the arbitration hearing;

(xiv) whether, at the arbitration hearing:

(a) testimony may be presented in person, in writing, by videoconference, via the internet, telephonically, or by other reasonable means;

(b) there will be a stenographic transcript or other record of the proceeding and, if so, who will make arrangements to provide it;

(xv) whether any procedure needs to be established for the issuance of subpoenas;

(xvi) the identification of any ongoing, related litigation or arbitration;

(xvii) whether post-hearing submissions will be filed;

(xviii) the form of the arbitration award; and

(xix) any other matter the arbitrator considers appropriate or a party wishes to raise.

(b) The arbitrator shall issue a written order memorializing decisions made and agreements reached during or following the preliminary hearing.


Expedited Procedures

E-1. Limitation on Extensions

Except in extraordinary circumstances, the AAA or the arbitrator may grant a party no more than one seven-day extension of time to respond to the Demand for Arbitration or counterclaim as provided in Section R-5.

E-2. Changes of Claim or Counterclaim

A claim or counterclaim may be increased in amount, or a new or different claim or counterclaim added, upon the agreement of the other party, or the consent of the arbitrator. After the arbitrator is appointed, however, no new or different claim or counterclaim may be submitted except with the arbitrator’s consent. If an increased claim or counterclaim exceeds $75,000, the case will be administered under the regular procedures unless all parties and the arbitrator agree that the case may continue to be processed under the Expedited Procedures.

E-3. Serving of Notices

In addition to notice provided by Section R-43, the parties shall also accept notice by telephone. Telephonic notices by the AAA shall subsequently be confirmed in writing to the parties. Should there be a failure to confirm in writing any such oral notice, the proceeding shall nevertheless be valid if notice has, in fact, been given by telephone.

E-4. Appointment and Qualifications of Arbitrator

(a) The AAA shall simultaneously submit to each party an identical list of five proposed arbitrators drawn from its National Roster from which one arbitrator shall be appointed.

(b) The parties are encouraged to agree to an arbitrator from this list and to advise the AAA of their agreement. If the parties are unable to agree upon an arbitrator, each party may strike two names from the list and return it to the AAA within seven days from the date of the AAA’s mailing to the parties. If for any reason the appointment of an arbitrator cannot be made from the list, the AAA may make the appointment from other members of the panel without the submission of additional lists.

(c) The parties will be given notice by the AAA of the appointment of the arbitrator, who shall be subject to disqualification for the reasons specified in Section R-18. The parties shall notify the AAA within seven calendar days of any objection to the arbitrator appointed. Any such objection shall be for cause and shall be confirmed in writing to the AAA with a copy to the other party or parties.


E-5. Exchange of Exhibits

At least two business days prior to the hearing, the parties shall exchange copies of all exhibits they intend to submit at the hearing. The arbitrator shall resolve disputes concerning the exchange of exhibits.

E-6. Proceedings on Documents and Procedures for the Resolution of Disputes Through Document Submission

Where no party’s claim exceeds $25,000, exclusive of interest, attorneys’ fees and arbitration costs, and other cases in which the parties agree, the dispute shall be resolved by submission of documents, unless any party requests an oral hearing, or the arbitrator determines that an oral hearing is necessary. Where cases are resolved by submission of documents, the following procedures may be utilized at the agreement of the parties or the discretion of the arbitrator:

(a) Within 14 calendar days of confirmation of the arbitrator’s appointment, the arbitrator may convene a preliminary management hearing, via conference call, video conference, or internet, to establish a fair and equitable procedure for the submission of documents, and, if the arbitrator deems appropriate, a schedule for one or more telephonic or electronic conferences.

(b) The arbitrator has the discretion to remove the case from the documents-only process if the arbitrator determines that an in-person hearing is necessary.

(c) If the parties agree to in-person hearings after a previous agreement to proceed under this rule, the arbitrator shall conduct such hearings. If a party seeks to have in-person hearings after agreeing to this rule, but there is not agreement among the parties to proceed with in-person hearings, the arbitrator shall resolve the issue after the parties have been given the opportunity to provide their respective positions on the issue.

(d) The arbitrator shall establish the date for either written submissions or a final telephonic or electronic conference. Such date shall operate to close the hearing and the time for the rendering of the award shall commence.

(e) Unless the parties have agreed to a form of award other than that set forth in rule R-45, when the parties have agreed to resolve their dispute by this rule, the arbitrator shall render the award within 14 calendar days from the date the hearing is closed.

(f) If the parties agree to a form of award other than that described in rule R-45, the arbitrator shall have 30 calendar days from the date the hearing is declared closed in which to render the award.

(g) The award is subject to all other provisions of the Regular Track of these rules which pertain to awards.


E-7. Date, Time, and Place of Hearing

In cases in which a hearing is to be held, the arbitrator shall set the date, time, and place of the hearing, to be scheduled to take place within 30 calendar days of confirmation of the arbitrator’s appointment. The AAA will notify the parties in advance of the hearing date.

E-8. The Hearing

(a) Generally, the hearing shall not exceed one day. Each party shall have equal opportunity to submit its proofs and complete its case. The arbitrator shall determine the order of the hearing, and may require further submission of documents within two business days after the hearing. For good cause shown, the arbitrator may schedule additional hearings within seven business days after the initial day of hearings.

(b) Generally, there will be no stenographic record. Any party desiring a stenographic record may arrange for one pursuant to the provisions of Section R-28.

E-9. Time of Award

Unless otherwise agreed by the parties, the award shall be rendered not later than 14 calendar days from the date of the closing of the hearing or, if oral hearings have been waived, from the due date established for the receipt of the parties’ final statements and proofs.

E-10. Arbitrator’s Compensation

Arbitrators will receive compensation at a rate to be suggested by the AAA regional office.


Procedures for Large, Complex Commercial Disputes

L-1. Administrative Conference

Prior to the dissemination of a list of potential arbitrators, the AAA shall, unless the parties agree otherwise, conduct an administrative conference with the parties and/or their attorneys or other representatives by conference call. The conference will take place within 14 calendar days after the commencement of the arbitration. In the event the parties are unable to agree on a mutually acceptable time for the conference, the AAA may contact the parties individually to discuss the issues contemplated herein. Such administrative conference shall be conducted for the following purposes and for such additional purposes as the parties or the AAA may deem appropriate:

(a) to obtain additional information about the nature and magnitude of the dispute and the anticipated length of hearing and scheduling;

(b) to discuss the views of the parties about the technical and other qualifications of the arbitrators;

(c) to obtain conflicts statements from the parties; and

(d) to consider, with the parties, whether mediation or other non-adjudicative methods of dispute resolution might be appropriate.

L-2. Arbitrators

(a) Large, complex commercial cases shall be heard and determined by either one or three arbitrators, as may be agreed upon by the parties. With the exception in paragraph (b) below, if the parties are unable to agree upon the number of arbitrators and a claim or counterclaim involves at least $1,000,000, then three arbitrator(s) shall hear and determine the case. If the parties are unable to agree on the number of arbitrators and each claim and counterclaim is less than $1,000,000, then one arbitrator shall hear and determine the case.

(b) In cases involving the financial hardship of a party or other circumstance, the AAA at its discretion may require that only one arbitrator hear and determine the case, irrespective of the size of the claim involved in the dispute.

(c) The AAA shall appoint arbitrator(s) as agreed by the parties. If they are unable to agree on a method of appointment, the AAA shall appoint arbitrators from the Large, Complex Commercial Case Panel, in the manner provided in the regular Commercial Arbitration Rules. Absent agreement of the parties, the arbitrator(s) shall not have served as the mediator in the mediation phase of the instant proceeding.


L-3. Management of Proceedings

(a) The arbitrator shall take such steps as deemed necessary or desirable to avoid delay and to achieve a fair, speedy and cost-effective resolution of a Large, Complex Commercial Dispute.

(b) As promptly as practicable after the selection of the arbitrator(s), a preliminary hearing shall be scheduled in accordance with sections P-1 and P-2 of these rules.

(c) The parties shall exchange copies of all exhibits they intend to submit at the hearing at least 10 calendar days prior to the hearing unless the arbitrator(s) determines otherwise.

(d) The parties and the arbitrator(s) shall address issues pertaining to the pre-hearing exchange and production of information in accordance with rule R-22 of the AAA Commercial Rules, and the arbitrator’s determinations on such issues shall be included within the Scheduling and Procedure Order.

(e) The arbitrator, or any single member of the arbitration tribunal, shall be authorized to resolve any disputes concerning the pre-hearing exchange and production of documents and information by any reasonable means within his discretion, including, without limitation, the issuance of orders set forth in rules R-22 and R-23 of the AAA Commercial Rules.

(f) In exceptional cases, at the discretion of the arbitrator, upon good cause shown and consistent with the expedited nature of arbitration, the arbitrator may order depositions to obtain the testimony of a person who may possess information determined by the arbitrator to be relevant and material to the outcome of the case. The arbitrator may allocate the cost of taking such a deposition.

(g) Generally, hearings will be scheduled on consecutive days or in blocks of consecutive days in order to maximize efficiency and minimize costs.


Administrative Fee Schedules (Standard And Flexible Fees)

The AAA has two administrative fee options for parties filing claims or counterclaims, the Standard Fee Schedule and Flexible Fee Schedule. The

Standard Fee Schedule has a two payment schedule, and the Flexible Fee

Schedule has a three payment schedule which offers lower initial filing fees, but potentially higher total administrative fees of approximately 12% to 19% for cases that proceed to a hearing. The administrative fees of the AAA are based on the amount of the claim or counterclaim. Arbitrator compensation is not included in this schedule. Unless the parties agree otherwise, arbitrator compensation and administrative fees are subject to allocation by the arbitrator in the award. In an effort to make arbitration costs reasonable for consumers, the AAA has a separate fee schedule for consumer-related disputes. Please refer to Section C-8 of the Supplementary Procedures for Consumer-Related Disputes when filing a consumer-related claim. Note that the Flexible Fee Schedule is not available on cases administered under these supplementary procedures.

The AAA applies the Supplementary Procedures for Consumer-Related Disputes to arbitration clauses in agreements between individual consumers and businesses where the business has a standardized, systematic application of arbitration clauses with customers and where the terms and conditions of the purchase of standardized, consumable goods or services are non-negotiable or primarily non-negotiable in most or all of its terms, conditions, features, or choices. The product or service must be for personal or household use. The AAA will have the discretion to apply or not to apply the Supplementary Procedures and the parties will be able to bring any disputes concerning the application or non-application to the attention of the arbitrator. Consumers are not prohibited from seeking relief in a small claims court for disputes or claims within the scope of its jurisdiction, even in consumer arbitration cases filed by the business.

Fees for incomplete or deficient filings: Where the applicable arbitration agreement does not reference the AAA, the AAA will attempt to obtain the agreement of the other parties to the dispute to have the arbitration administered by the AAA. However, where the AAA is unable to obtain the agreement of the parties to have the AAA administer the arbitration, the AAA will administratively close the case and will not proceed with the administration of the arbitration. In these cases, the AAA will return the filing fees to the filing party, less the amount specified in the fee schedule below for deficient filings.


Parties that file Demands for Arbitration that are incomplete or otherwise do not meet the filing requirements contained in these rules shall also be charged the amount specified below for deficient filings if they fail or are unable to respond to the AAA’s request to correct the deficiency.

Fees for additional services: The AAA reserves the right to assess additional administrative fees for services performed by the AAA beyond those provided for in these rules which may be required by the parties’ agreement or stipulation.

Standard Fee Schedule

An Initial Filing Fee is payable in full by a filing party when a claim, counterclaim, or additional claim is filed. A Final Fee will be incurred for all cases that proceed to their first hearing. This fee will be payable in advance at the time that the first hearing is scheduled. This fee will be refunded at the conclusion of the case if no hearings have occurred. However, if the Association is not notified at least 24 hours before the time of the scheduled hearing, the Final Fee will remain due and will not be refunded.


These fees will be billed in accordance with the following schedule:

1 This fee is applicable when a claim or counterclaim is not for a monetary amount. Where a monetary claim amount is not known, parties will be required to state a range of claims or be subject to a filing fee of $10,200.

2 The Deficient Claim Filing Fee shall not be charged in cases filed by a consumer in an arbitration governed by the Supplementary Procedures for the Resolution of Consumer-Related Disputes, or in cases filed by an Employee who is submitting their dispute to arbitration pursuant to an employer promulgated plan.

3 The AAA may assess additional fees where procedures or services outside the rules sections are required under the parties’ agreement or by stipulation.

AMOUNT OF CLAIM INITIAL FILING FEE FINAL FEE

Above $0 to $10,000 $775 $200

Above $10,000 to $75,000 $975 $300

Above $75,000 to $150,000 $1,850 $750

Above $150,000 to $300,000 $2,800 $1,250

Above $300,000 to $500,000 $4,350 $1,750

Above $500,000 to $1,000,000 $6,200 $2,500

Above $1,000,000 to $5,000,000 $8,200 $3,250

Above $5,000,000 to $10,000,000 $10,200 $4,000

Above $10,000,000Base fee of $12,800 plus .01% of the

amount above $10,000,000 Fee Capped at $65,000

$6,000

Nonmonetary Claims1 $3,350 $1,250

Deficient Claim Filing Fee2 $350

Additional Services3


Fees are subject to increase if the amount of a claim or counterclaim is modified after the initial filing date. Fees are subject to decrease if the amount of a claim or counterclaim is modified before the first hearing.

The minimum fees for any case having three or more arbitrators are $2,800 for theInitial Filing Fee, plus a $1,250 Final Fee. Expedited Procedures are applied in any case where no disclosed claim or counterclaim exceeds $75,000, exclusive of interest and arbitration costs.

Parties on cases filed under either the Flexible Fee Schedule or the Standard Fee Schedule that are held in abeyance for one year will be assessed an annual abeyance fee of $300. If a party refuses to pay the assessed fee, the other party or parties may pay the entire fee on behalf of all parties, otherwise the matter will be administratively closed.

For more information, please contact your local AAA office, case management center, or our Customer Service desk at 1-800-778-7879.

Refund Schedule for Standard Fee Schedule

The AAA offers a refund schedule on filing fees connected with the Standard Fee Schedule. For cases with claims up to $75,000, a minimum filing fee of $350 will not be refunded. For all other cases, a minimum fee of $600 will not be refunded. Subject to the minimum fee requirements, refunds will be calculated as follows:

> 100% of the filing fee, above the minimum fee, will be refunded if the case is settled or withdrawn within five calendar days of filing.

> 50% of the filing fee, will be refunded if the case is settled or withdrawn between six and 30 calendar days of filing.

> 25% of the filing fee will be refunded if the case is settled or withdrawn between 31 and 60 calendar days of filing.

No refund will be made once an arbitrator has been appointed (this includes one arbitrator on a three-arbitrator panel). No refunds will be granted on awarded cases.

Note: The date of receipt of the Demand for Arbitration with the AAA will be used to calculate refunds of filing fees for both claims and counterclaims.


Flexible Fee Schedule

A non-refundable Initial Filing Fee is payable in full by a filing party when a claim, counterclaim, or additional claim is filed. Upon receipt of the Demand for Arbitration, the AAA will promptly initiate the case and notify all parties as well as establish the due date for filing of an Answer, which may include a Counterclaim. In order to proceed with the further administration of the arbitration and appointment of the arbitrator(s), the appropriate, non-refundable Proceed Fee outlined below must be paid.

If a Proceed Fee is not submitted within ninety (90) days of the filing of the Claimant’s Demand for Arbitration, the Association will administratively close the file and notify all parties.

No refunds or refund schedule will apply to the Filing or Proceed Fees once received.

The Flexible Fee Schedule below also may be utilized for the filing of counterclaims. However, as with the Claimant’s claim, the counterclaim will not be presented to the arbitrator until the Proceed Fee is paid.

A Final Fee will be incurred for all claims and/or counterclaims that proceed to their first hearing. This fee will be payable in advance when the first hearing is scheduled, but will be refunded at the conclusion of the case if no hearings have occurred. However, if the Association is not notified of a cancellation at least 24 hours before the time of the scheduled hearing, the Final Fee will remain due and will not be refunded.


All fees will be billed in accordance with the following schedule:

1 This fee is applicable when a claim or counterclaim is not for a monetary amount. Where a monetary claim amount is not known, parties will be required to state a range of claims or be subject to a filing fee of $3,500 and a proceed fee of $8,200.

2 The AAA reserves the right to assess additional administrative fees for services performed by the AAA beyond those provided for in these rules and which may be required by the parties’ agreement or stipulation.

AMOUNT OF CLAIM INITIAL FILING FEE PROCEED FEE FINAL FEE

Above $0 to $10,000 $400 $475 $200

Above $10,000 to $75,000 $625 $500 $300

Above $75,000 to $150,000 $850 $1,250 $750

Above $150,000 to $300,000 $1,000 $2,125 $1,250

Above to $300,000 to $500,000 $1,500 $3,400 $1,750

Above to $500,000 to $1,000,000 $2,500 $4,500 $2,500

Above $1,000,000 to $5,000,000 $2,500 $6,700 $3,250

Above $5,000,000 to $10,000,000 $3,500 $8,200 $4,000

Above $10,000,000 $4,500$10,300 plus .01%

of claim amount over $10,000,000 up to $65,000

$6,000

Nonmonetary 1 $2,000 $2,000 $1,250

Deficient Claim Filing Fee $350

Additional Services2


For more information, please contact your local AAA office, case management center, or our Customer Service desk at 1-800-778-7879. All fees are subject to increase if the amount of a claim or counterclaim is modified after the initial filing date. Fees are subject to decrease if the amount of a claim or counterclaim is modified before the first hearing.

The minimum fees for any case having three or more arbitrators are $1,000 for the Initial Filing Fee; $2,125 for the Proceed Fee; and $1,250 for the Final Fee. Under the Flexible Fee Schedule, a party’s obligation to pay the Proceed Fee shall remain in effect regardless of any agreement of the parties to stay, postpone or otherwise modify the arbitration proceedings.

Parties that, through mutual agreement, have held their case in abeyance for one year will be assessed an annual abeyance fee of $300. If a party refuses to pay the assessed fee, the other party or parties may pay the entire fee on behalf of all parties, otherwise the matter will be closed.

Note: The date of receipt by the AAA of the Demand for Arbitration will be used to calculate the ninety (90) day time limit for payment of the Proceed Fee.

There is no Refund Schedule in the Flexible Fee Schedule.

Hearing Room Rental

The fees described above do not cover the cost of hearing rooms, which are available on a rental basis. Check with the AAA for availability and rates.


Commercial Mediation Procedures

M-1. Agreement of Parties

Whenever, by stipulation or in their contract, the parties have provided for mediation or conciliation of existing or future disputes under the auspices of the American Arbitration Association or under these procedures, the parties and their representatives, unless agreed otherwise in writing, shall be deemed to have made these procedural guidelines, as amended and in effect as of the date of filing of a request for mediation, a part of their agreement and designate the AAA as the administrator of their mediation.

The parties by mutual agreement may vary any part of these procedures including, but not limited to, agreeing to conduct the mediation via telephone or other electronic or technical means.

M-2. Initiation of Mediation

Any party or parties to a dispute may initiate mediation under the AAA’s auspices by making a request for mediation to any of the AAA’s regional offices or case management centers via telephone, email, regular mail or fax. Requests for mediation may also be filed online via WebFile at www.adr.org.

The party initiating the mediation shall simultaneously notify the other party or parties of the request. The initiating party shall provide the following information to the AAA and the other party or parties as applicable:

(i) A copy of the mediation provision of the parties’ contract or the parties’ stipulation to mediate.

(ii) The names, regular mail addresses, email addresses, and telephone numbers of all parties to the dispute and representatives, if any, in the mediation.

(iii) A brief statement of the nature of the dispute and the relief requested.

(iv) Any specific qualifications the mediator should possess.

M-3. Representation

Subject to any applicable law, any party may be represented by persons of the party’s choice. The names and addresses of such persons shall be communicated in writing to all parties and to the AAA.


M-4. Appointment of the Mediator If the parties have not agreed to the appointment of a mediator and have not provided any other method of appointment, the mediator shall be appointed in the following manner:

(i) Upon receipt of a request for mediation, the AAA will send to each party a list of mediators from the AAA’s Panel of Mediators. The parties are encouraged to agree to a mediator from the submitted list and to advise the AAA of their agreement.

(ii) If the parties are unable to agree upon a mediator, each party shall strike unacceptable names from the list, number the remaining names in order of preference, and return the list to the AAA. If a party does not return the list within the time specified, all mediators on the list shall be deemed acceptable. From among the mediators who have been mutually approved by the parties, and in accordance with the designated order of mutual preference, the AAA shall invite a mediator to serve.

(iii) If the parties fail to agree on any of the mediators listed, or if acceptable mediators are unable to serve, or if for any other reason the appointment cannot be made from the submitted list, the AAA shall have the authority to make the appointment from among other members of the Panel of Mediators without the submission of additional lists.

M-5. Mediator’s Impartiality and Duty to Disclose

AAA mediators are required to abide by the Model Standards of Conduct for Mediators in effect at the time a mediator is appointed to a case. Where there is a conflict between the Model Standards and any provision of these Mediation Procedures, these Mediation Procedures shall govern. The Standards require mediators to (i) decline a mediation if the mediator cannot conduct it in an impartial manner, and (ii) disclose, as soon as practicable, all actual and potential conflicts of interest that are reasonably known to the mediator and could reasonably be seen as raising a question about the mediator’s impartiality. Prior to accepting an appointment, AAA mediators are required to make a reasonable inquiry to determine whether there are any facts that a reasonable individual would consider likely to create a potential or actual conflict of interest for the mediator. AAA mediators are required to disclose any circumstance likely to create a presumption of bias or prevent a resolution of the parties’ dispute within the time-frame desired by the parties. Upon receipt of such disclosures, the AAA shall immediately communicate the disclosures to the parties for their comments.


The parties may, upon receiving disclosure of actual or potential conflicts of interest of the mediator, waive such conflicts and proceed with the mediation. In the event that a party disagrees as to whether the mediator shall serve, or in the event that the mediator’s conflict of interest might reasonably be viewed as undermining the integrity of the mediation, the mediator shall be replaced.

M-6. Vacancies

If any mediator shall become unwilling or unable to serve, the AAA will appoint another mediator, unless the parties agree otherwise, in accordance with section M-4.

M-7. Duties and Responsibilities of the Mediator

(i) The mediator shall conduct the mediation based on the principle of party self-determination. Self-determination is the act of coming to a voluntary, uncoerced decision in which each party makes free and informed choices as to process and outcome.

(ii) The mediator is authorized to conduct separate or ex parte meetings and other communications with the parties and/or their representatives, before, during, and after any scheduled mediation conference. Such communications may be conducted via telephone, in writing, via email, online, in person or otherwise.

(iii) The parties are encouraged to exchange all documents pertinent to the relief requested. The mediator may request the exchange of memoranda on issues, including the underlying interests and the history of the parties’ negotiations. Information that a party wishes to keep confidential may be sent to the mediator, as necessary, in a separate communication with the mediator.

(iv) The mediator does not have the authority to impose a settlement on the parties but will attempt to help them reach a satisfactory resolution of their dispute. Subject to the discretion of the mediator, the mediator may make oral or written recommendations for settlement to a party privately or, if the parties agree, to all parties jointly.

(v) In the event a complete settlement of all or some issues in dispute is not achieved within the scheduled mediation session(s), the mediator may continue to communicate with the parties, for a period of time, in an ongoing effort to facilitate a complete settlement.

(vi) The mediator is not a legal representative of any party and has no fiduciary duty to any party.


M-8. Responsibilities of the Parties

The parties shall ensure that appropriate representatives of each party, having authority to consummate a settlement, attend the mediation conference.

Prior to and during the scheduled mediation conference session(s) the parties and their representatives shall, as appropriate to each party’s circumstances, exercise their best efforts to prepare for and engage in a meaningful and productive mediation.

M-9. Privacy

Mediation sessions and related mediation communications are private proceedings. The parties and their representatives may attend mediation sessions. Other persons may attend only with the permission of the parties and with the consent of the mediator.

M-10. Confidentiality

Subject to applicable law or the parties’ agreement, confidential information disclosed to a mediator by the parties or by other participants (witnesses) in the course of the mediation shall not be divulged by the mediator. The mediator shall maintain the confidentiality of all information obtained in the mediation, and all records, reports, or other documents received by a mediator while serving in that capacity shall be confidential.

The mediator shall not be compelled to divulge such records or to testify in regard to the mediation in any adversary proceeding or judicial forum.

The parties shall maintain the confidentiality of the mediation and shall not rely on, or introduce as evidence in any arbitral, judicial, or other proceeding the following, unless agreed to by the parties or required by applicable law:

(i) Views expressed or suggestions made by a party or other participant with respect to a possible settlement of the dispute;

(ii) Admissions made by a party or other participant in the course of the mediation proceedings;

(iii) Proposals made or views expressed by the mediator; or

(iv) The fact that a party had or had not indicated willingness to accept a proposal for settlement made by the mediator.


M-11. No Stenographic Record

There shall be no stenographic record of the mediation process.

M-12. Termination of Mediation

The mediation shall be terminated:

(i) By the execution of a settlement agreement by the parties; or

(ii) By a written or verbal declaration of the mediator to the effect that further efforts at mediation would not contribute to a resolution of the parties’ dispute; or

(iii) By a written or verbal declaration of all parties to the effect that the mediation proceedings are terminated; or

(iv) When there has been no communication between the mediator and any party or party’s representative for 21 days following the conclusion of the mediation conference.

M-13. Exclusion of Liability

Neither the AAA nor any mediator is a necessary party in judicial proceedings relating to the mediation. Neither the AAA nor any mediator shall be liable to any party for any error, act or omission in connection with any mediation conducted under these procedures.

M-14. Interpretation and Application of Procedures

The mediator shall interpret and apply these procedures insofar as they relate to the mediator’s duties and responsibilities. All other procedures shall be interpreted and applied by the AAA.

M-15. Deposits

Unless otherwise directed by the mediator, the AAA will require the parties to deposit in advance of the mediation conference such sums of money as it, in consultation with the mediator, deems necessary to cover the costs and expenses of the mediation and shall render an accounting to the parties and return any unexpended balance at the conclusion of the mediation.


M-16. Expenses

All expenses of the mediation, including required traveling and other expenses or charges of the mediator, shall be borne equally by the parties unless they agree otherwise. The expenses of participants for either side shall be paid by the party requesting the attendance of such participants.

M-17. Cost of the Mediation

There is no filing fee to initiate a mediation or a fee to request the AAA to invite parties to mediate. The cost of mediation is based on the hourly mediation rate published on the mediator’s AAA profile. This rate covers both mediator compensation and an allocated portion for the AAA’s services. There is a four-hour minimum charge for a mediation conference. Expenses referenced in Section M-16 may also apply.

If a matter submitted for mediation is withdrawn or cancelled or results in a settlement after the agreement to mediate is filed but prior to the mediation conference the cost is $250 plus any mediator time and charges incurred. The parties will be billed equally for all costs unless they agree otherwise. If you have questions about mediation costs or services visit our website at www.adr.org or contact your local AAA office.

Conference Room Rental

The costs described above do not include the use of AAA conference rooms. Conference rooms are available on a rental basis. Please contact your local AAA office for availability and rates.

©2013 American Arbitration Association, Inc. All rights reserved. These rules are the copyrighted property of the

American Arbitration Association (AAA) and are intended to be used in conjunction with the AAA’s administrative services.

Any unauthorized use or modification of these rules may violate copyright laws and other applicable laws.

Please contact 800.778.7879 or [email protected] for additional information.

800.778.7879 | [email protected] | adr.org

Jeffrey GarciaVice PresidentPhone: 559.490.1860 Email: [email protected] cases in: AK, AZ, CA, HI, ID, MT, NV, NM, OR, UT, WA John M. BishopVice PresidentPhone: 404.320.5150 Email: [email protected] cases in: AL, DC, FL, GA, IN, KY, MD, NC, OH, SC, TN, VA

Harry HernandezDirectorPhone: 972.702.8222Email: [email protected] cases in: AR, CO, IL, IA, KS, LA, MN, MS, MO, NE, ND, OK, SD, TX, WI, WY Yvonne Baglini DirectorPhone: 866.293.4053 Email: [email protected] cases in: CT, DE, ME, MA, MI, NH, NY, NJ, PA, RI, VT, WV

Case Management Vice Presidents and Directors

States: Alabama, Georgia John M. BishopVice President Phone: 404.320.5150Email: [email protected]

States: Florida Rebecca Storrow, PhD. Vice PresidentPhone: 954.372.4341Email: [email protected]

States: Arkansas, Illinois, Iowa, Michigan, Minnesota, Missouri, North Dakota, South Dakota, Wisconsin A. Kelly Turner, Esq.Vice PresidentPhone: 312.361.1116Email: [email protected]

States: Arizona, Idaho, Montana, Nevada, New Mexico, UtahDavid CoxVice PresidentPhone: 602.734.9304Email: [email protected]

States: Alaska, California, Hawaii, Oregon, WashingtonSerena Lee, Esq.Vice PresidentPhone: 415.671.4053Email: [email protected]

States: Delaware, District of Columbia, Maryland, New Jersey, Pennsylvania, VirginiaP. Jean Baker, Esq.Vice PresidentPhone: 202.223.7093Email: [email protected]

States: Colorado, Kansas, Nebraska, Oklahoma, WyomingLance TanakaVice PresidentPhone: 303.831.0824Email: [email protected] States: Louisiana, Mississippi, TexasAndrew BartonVice PresidentPhone: 210.998.5750Email: [email protected]

States: Indiana, Kentucky, North Carolina, Ohio, South Carolina, Tennessee, West VirginiaMichelle SkipperVice PresidentPhone: 704.643.8605Email: [email protected]

States: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, VermontKaren JalkutVice PresidentPhone: 617.695.6062Email: [email protected]

States: New YorkJeffrey T. Zaino, Esq.Vice PresidentPhone: 212.484.3224Email: [email protected]

Regional Vice Presidents

A R B I T R A T I O N

Arbitration

What trial lawyer would not want to be able to select the judgehearing the case? Arbitration allows the parties to determinethe arbitrator’s background. Unlike litigation, it gives themchoices and flexibity to design a process to fit their needs.

BY JOHN ARRASTIA JR. AND CHRISTI L. UNDERWOOD

YouControl

the Process

The ProcessControls

You

v.

v. Litigation:

John Arrastia Jr., a Miami, Florida-based attorney,practices mainly in the areas of domestic and internationalcommercial litigation and arbitration. He has representedquasi-governmental entities as well as commercial enter-prises of every size, both public and private. He serves onthe AAA panel of arbitrators. He holds an LL.M. ininternational arbitration and litigation from CambridgeUniversity. He may be reached at www.arrastia-law.com.

Christi L. Underwood, a commercial arbitrator, has beenon the AAA panel since 1989. She is a member of the bar

in Florida, New York and the District of Columbia; aFellow of the American College of Construction Lawyersand the College of Commercial Arbitrators; and a repre-sentative on the AAA National Construction DisputeResolution Committee. In addition, she serves on theAmerican Arbitration Association Board of Directors.Before graduating from the law school at the University ofFlorida, she obtained her general contractor’s license andowned a commercial construction company. She can bereached at www.clu-law.com.


2 N O V E M B E R 2 0 0 9 / J A N U A R Y 2 0 1 0

The advantages of a properly structuredand well-managed arbitration are espe-cially valuable today. With clients insist-

ing on more manageable litigation budgets andthe courts clogged with the fallout from a strug-gling economy, efficiency and reduced overallcosts are becoming the polestars of healthy clientrelations.

Arbitration is intended to be quicker, lessexpensive, and more efficient than litigation. Butmany litigators complain that the process hasbecome cumbersome andexpensive. This happens whentrial attorneys treat the arbi-tration process as they wouldfederal or state court litiga-tion. Why? One explanationis that they are taught to liti-gate using the court’s rules ofprocedure and evidence, andwhen faced with the lessstructured and less familiararbitration process, they natu-rally turn to what they knowand thus, try to incorporatethe rules and procedures ofcourt into the arbitrationprocess. This transforms arbi-tration into a mirror image ofcourt litigation, with the at-tendant expense and delay.

Trial attorneys can satisfytheir clients’ desires to econo-mize on dispute resolution byunderstanding the differencesbetween arbitration and litiga-tion, for it is these differencesthat provide the benefits ofarbitration. Only then cancounsel maximize those benefits and use theinherent flexibility of arbitration to tailor theprocess to the needs of the client and the circum-stances of the dispute.

Part I of this article discusses the core conceptof arbitration and the ways that arbitration differsfrom litigation. Part II, which will be publishedin a subsequent issue of this Journal, will discusstechniques trial counsel can use to achieve anefficient and cost-effective arbitration.

I. Core Concept of ArbitrationThe core concept of arbitration is its flexibili-

ty. This means that it is not governed by rigid,detailed rules. The parties have a significantamount of freedom of choice when it comes todesigning the process. The concepts of choiceand flexibility are recurring themes in this article.

a. Flexible Rules

Institutional arbitration rules are purposelyvery general and give the arbitrator great discre-tion in the management of the process. Thisallows the parties and the arbitrator to considerthe most efficient ways to proceed. Thus, theAmerican Arbitration Association’s (AAA) Com-mercial Arbitration Rules provide that the partiesmay vary the procedures stated in the rules.1 Inaddition, nearly all the AAA rules state that theyapply “unless the parties otherwise agree.” This is

a far cry from litigation,which is highly regulated bydetailed, step-by-step rules ofprocedure, supplemented bycase law, and subject to thepreferences of the presidingjudge.

b. ChoiceThe flexibility of arbitra-

tion provides choices onmany levels. First, there ischoice relating to the selec-tion of the arbitrator. Whattrial lawyer would not want tobe able to select the judgehearing the case? The abilityto choose the decision makerin arbitration is one of theprimary benefits of the pro-cess. There is also choice inmatching the speed of theprocess and the amount ofdiscovery that is allowed tothe size of the dispute. Thus,one can fast-track a small caseand agree to little or no dis-covery, and in a large case

employ large, complex case procedures and agreeto more discovery. In addition, the parties canagree on the form of the award. They can alsoagree to limit the extent to which the final deci-sion is disclosed to third parties.

Suppose that an existing client comes to youwith two new matters that it wants to arbitrate,arising out of the same standard form contract,each raising the same complex issues, but oneclaim involves $100,000, while the other involves$8 million. Would you approach each dispute thesame way? Probably not, and it is fairly certainyour client would prefer the resolution of thesmaller matter to be resolved faster and cost sub-stantially less. But court rules of procedure gen-erally do not distinguish between cases based onthe amount in controversy (except for jurisdic-tional purposes and except for claims that qualify

Trial attorneyscan satisfy theirclients’ desires toeconomize on dis-pute resolution byunderstanding the

differences be-tween arbitrationand litigation, forit is these differ-

ences that providethe benefits of

arbitration.

D I S P U T E R E S O L U T I O N J O U R N A L 3

for small claims court). Most institutional arbitra-tion rules automatically provide for different pro-cedures for small, mid-size and large disputes tai-loring the time, extent of discovery allowed, andcosts accordingly.

The best time to decide arbitration details isbefore a dispute arises in the arbitration clause ofthe parties’ contract.2 However, if the arbitrationdoes not contain such details, the remainingpoints can be decided at a preliminary conferencewith the arbitrator.

c. Fair ResultsMost decisions rendered by arbitrators will be

made after a great deal of thought and time hasbeen given to reviewing the presentation of evi-dence and they will be based on an underlyingknowledge of the subject matter of the disputeand commercial reasonableness where applicable.Unlike jurors, arbitrators are trained in how togive appropriate weight to evidence, how to man-age the process to maintain a level playing field,and provide a decision that is just and fair.

d. Self-Determination to a PointThe flexibility of arbitration decreases as the

final hearing approaches. For example, once thearbitrator has issued a pre-hearing schedulingorder establishing the framework for the arbitra-tion procedures and deadlines, unless the partiesagree, it may be as difficult to persuade the arbi-trator as it would be to persuade a judge to makeany changes to the order. More importantly, afterthe final award is entered there is little flexibilitysince the arbitrator will have no authority tochange the decision on the merits under the doc-trine of functus officio. Final arbitration awards arebinding, enforceable and almost impossible tochallenge in court, since the grounds to appealsuch awards are very limited and courts affordthem great deference.3 The lesson is that a partyshould focus on establishing a procedure early inthe process.

II. Differences Between Arbitration and Litigation

Applying the core concepts of flexibility andparty choice, arbitration can differ from litigationin almost every way.

a. Decision Maker

We have already pointed out that arbitrationdiffers from litigation in that the parties can par-ticipate in the selection of their decision maker.At most, in litigation, trial attorneys can decidewhether to file the case in state or federal courtand whether to seek a jury or a bench trial. In any

event, a judge will likely be assigned to the caseby a blind draw of the clerk of the court.

Arbitration does not offer the option of a jury.What it does offer is the ability to have a decisionmaker with far more expertise than a judge orjury would have in the specific issues presentedby the case. Not only that, the parties can decidehow many decision makers there will be.

i. Size of Tribunal. The parties can agree on asingle arbitrator or a panel of three. Some partiesbelieve that the “collective wisdom” of threedecision makers may encourage more accurateresults. Though panels raise the cost of arbitra-tion, they make the most sense in large, complexmatters.

The parties can state how many arbitratorsthere should be in their arbitration clause. Orthey can agree to follow the rules of an arbitra-tion institution. If they opt to use the AAACommercial Arbitration Rules, there will be apanel of three if the dispute qualifies for theLarge, Complex Case Procedures and the partieshave not agreed otherwise.4 When parties agreeto use three arbitrators, they can also decide if allthree will be neutral, or if two will be partial tothe party that appointed them. The trend istoward a panel of all neutral arbitrators. AAAcommercial rule R-12 provides that party-appointed panel members must be impartialunless the parties have specifically agreed other-wise.5

Arbitrations involving three arbitrators maytake longer because of scheduling difficulties andthe need for the panelists to find time to confer,deliberate and write an award. Even if an arbitra-tion clause calls for three arbitrators, the partiescan agree to use one arbitrator if they are con-cerned about reducing the cost of resolving thedispute.

ii. Qualifications of the Arbitrator. Arbitratorsare usually chosen for their ability to efficientlymanage an arbitration proceeding and/or theirknowledge of a particular field or issue. Forexample, the parties to a construction disputemay want the arbitrator to be a construction law-yer, a general contractor, an architect, or an engi-neer, or some combination of these professions.Each skill set brings a different perspective to thearbitration. Having expertise in the subject mat-ter is considered an advantage because the arbi-trator should understand the facts and issuesmore quickly than judges or jurors who are likelyunfamiliar with construction. The same is truewhether the dispute involves real estate, biotech,telecommunications, international trade, or someother area of specialization.

Parties should want an arbitrator who is a



good manager, who will be proactive in keepingthe arbitration moving forward. Some want anarbitrator who asks questions at the final hearingwhile others prefer minimal or no questioning bythe arbitrator.

Then there are practical considerations, suchas the arbitrator’s availability to serve. If youneed the final hearing in October but the arbitra-tor is scheduled for a three-month trial in the fall,then that arbitrator is not the one for you. Toavoid delays, parties with particular schedulingneeds should ask the administering institutionalcase manager to screen prospective arbitrators inadvance of their appointment concerning theiravailability.

The parties may also have other requirementsthat in their mind will result in a more fair hear-ing. For example, in an employment case, theemployee might want a more ethnically diverse

panel. In AAA arbitrations, the case manager pro-vides a list of arbitrator candidates that match thecriteria requested by the parties.

b. Rules

As indicated above, a key difference betweenthe two processes is that litigation is governed byprocedural and evidentiary rules that the partiescannot change, while arbitration proceedings aregoverned by rules selected by the parties, whichcan be changed if they both agree. Arbitrators arecharged with following the rules unless the partiesagree otherwise. In addition, an arbitration pro-ceeding may be subject to the Federal ArbitrationAct (FAA),6 a state arbitration act, or an interna-tional convention if the dispute is international innature. These laws and treaties generally do nottake away the flexibility of arbitration. Rather,they focus on the enforcement of and challenge toarbitration agreements and awards.

c. Confidentiality

An important benefit of arbitration that is notavailable in litigation is that it is more privatethan litigation. Litigation is public and oftennewsworthy. The Internet has made news of liti-gation more widely available. Also, anyone has

the right to review the court file and attend thecourt proceedings, absent an order sealing thecase or closing the proceedings. Sealing any partof a court record is exceptionally difficult, andtypically includes notice to the press so that itmay object to any such proposed order.

The public cannot attend arbitration proceed-ings between private parties. Under AAA com-mercial rule R-23, only a party with a direct inter-est in the proceedings is entitled to attend, unlessthe arbitrator directs otherwise. The privacy ofarbitration derives from its contractual nature, nota statute. There is no federal or state law makingarbitration confidential. Thus, in order to obtainconfidentiality, parties often enter into a confi-dentiality agreement concerning the arbitrationitself. Sometimes a party may also enter into aseparate confidentiality agreement with an expertwitness. However, a confidentiality agreement is

effective only to the extent that the signatoriesadhere to it. In addition, a confidentiality agree-ment will not prevent a party from revealing thearbitration if disclosures are required by law orgovernment regulation (such as a security law fil-ing). It should also be noted that arbitrationproviders may have a legal obligation to discloseinformation about their cases. For example,administering institutions that do business inCalifornia are required by state law to providedetailed information about their national con-sumer case load. “Consumer” is broadly defined.

d. Consequences of a Failure to Appear

In court, a failure to appear or file a writtenresponse to pleadings can result in a default judg-ment. The concept of a default judgment is notrecognized in arbitration. In arbitration, if therespondent does not appear, the claimant muststill sustain its burden of proof and submit evi-dence sufficient to sustain the award.7

e. Court Scheduling Conference v. PreliminaryConference

The court scheduling conference is usuallyheld to schedule the discovery in the case, ratherthan to set the trial. Indeed the trial date will not

An important benefit of arbitration that is not avail-able in litigation is that it is more private than litigation.

Litigation is public and often newsworthy. The Inter-net has made news of litigation more widely available.


be set until much later (often years later in largecases) and they are often postponed several timesif the court has a backlog of cases. The discoverydates will be set in accordance with rigid courtrules. Following the scheduling conference, thejudge often orders the parties to participate in asettlement conference.

The preliminary conference in arbitration isfar more collaborative and broader in scope. Itsmain purpose is to identify and organize the stepsnecessary to prepare for the final hearing (i.e., thepre-hearing procedures), establish the dates forcompleting these procedures, and set a date cer-tain for the final hearing on the merits.

At the first preliminary conference (there canbe more than one), the arbitrator and counsel forthe parties (and sometimes party representatives)will discuss a variety of matters. The first confer-ence usually takes place on the telephone 30-45days after the arbitrator is appointed. The mat-ters discussed include, for example, the parties’needs for discovery, whether the parties expect toretain experts, and the use of cost-saving meas-ures that can be used to control the time and costof the proceeding. As a result of these discus-sions, the parties and the arbitrator will agree onthe pre-hearing procedures and deadlines, and setthe date for the final hearing.

Some arbitrators will ask the attorneys if theyhave raised the subject of mediation with theirclients. However, in arbitration the parties willnot be forced to mediate or to participate in asettlement conference as a condition to a finalhearing.

f. Paperwork

i. Pleadings. From a work standpoint, arbitra-tion requires less paperwork than litigation. Thepleadings are simpler than in court and not high-ly regulated. The first pleading is the demand,the purpose of which is to give the adversarynotice of the intention to arbitrate. The AAAcommercial rules require the demand (as well as acounterclaim) to contain a “statement of thenature of the dispute, the names and addresses ofall parties, any claims and counterclaims, theamount involved, if any, the remedy sought andthe hearing locale requested.”8

The adversary is not required to file an an-swering statement but has the option of doing so.The rules also encourage the parties to describetheir claims “in sufficient detail to make the cir-cumstances of the dispute clear to the arbitrator.”Often, the parties are given an opportunity tobetter define their positions after the first prelim-inary conference.

ii. Motions Generally. Arbitration contemplates

fewer motions than litigation. The only motionsspecifically contemplated by the AAA rules arethose seeking interim relief, resolution of a dis-covery dispute, or challenging the arbitrator’sjurisdiction or the arbitrability of a claim.

There are no formal requirements in the AAArules for motions or applications (except foremergency interim relief prior to the appoint-ment of the arbitrator). Therefore, in the an arbi-tration of any agreement or order of the arbitrator,a party may file a motion or application in theform of a letter or an e-mail. There are no brief-ing requirements in the rules, and no need toprepare proposed orders. The arbitrator normal-ly informs the parties what kind of supportingmaterials should be submitted with their letter ore-mail. The arbitrator will also set a date for theother side to submit its written comments.

iii. Dispositive Motions. Motions that decide allor part of a case in arbitration are called disposi-tive motions; in litigation they are summary judg-ment (SJ) motions. SJ motions are standard prac-tice in litigation. This is not the case in arbitra-tion where parties have a strong expectation ofbeing able to present their case at the final hear-ing. Nevertheless, dispositive motions are some-times very carefully used in arbitration. This ispossible because arbitrators are required to man-age the arbitration proceedings with an eyetoward efficiently resolving the case and thisincludes focusing the parties on dispositive issues.At the same time, they have the duty to treat theparties equally and give each a fair opportunity tobe heard.9 The efficient management obligationcan include the authority to hear and decide adispositive motion in an appropriate situation, aslong as all parties have been given a fair opportu-nity to be heard. The case law on this issue is notextensive, but several cases that exist have upheldarbitral rulings granting such motions.10 Forexample, the opportunity to be heard does notnecessarily mean an oral hearing on the merits.11

However, the authority to grant a dispositivemotion should not be used cavalierly or misusedbecause the award may be subject to challengeunder Section 10 of the FAA on the ground thatthe arbitrators exceeded their authority orrefused to hear evidence, or both.12 To protectthe award and afford appropriate process rightsof the parties, many arbitrators believe it is pru-dent to obtain the agreement of the parties to thedispositive motion procedure before agreeing tohear and decide a dispositive motion.

The arbitrator can ask the parties at the firstpreliminary conference if anyone has a dispositiveissue (such as one based on the statute of limita-tions, or an alleged waiver of consequential dam-



ages) that could be resolved by a summary judg-ment motion. If the answer is yes and the oppos-ing parties agree to allow the arbitrator to rule onthe issue in order to narrow issues or dispose ofthe case altogether without the necessity of a fullhearing, the parties can agree on the procedureto be followed. Such flexible procedures can savetime and money while giving the parties a fullopportunity to have the pertinent issues heard.

g. Discovery

In litigation, discovery cangenerate the largest single ex-pense. Depositions are standardin court cases. Each depositionrequires counsel to spend time toprepare the witness to testify (orto question the witness), reviewrelevant documents and attendthe deposition itself. This is fol-lowed by summarizing the depo-sition and paying for a copy ofthe transcript.

There is almost no restrictionon the amount of documents thatmay be requested from the ad-versary or third parties, all ofwhich need to be reviewed andanalyzed after they are produced.These often result in objections.

Interrogatories and requestsfor admission are standard in liti-gation. They invariably generatewritten objections and few sub-stantive responses. As a result, discovery disputesoften arise. They require the parties to file withthe court motions and supporting memoranda oflaw seeking a protective order or to compel a wit-ness to answer particular questions at a deposi-tion or to compel a party to produce withhelddocuments or to answer certain interrogatories.The court may require oral argument on themotion. This means that before appearing incourt, the attorneys will have to spend timepreparing an argument and anticipating the otherside’s arguments and the judge’s questions.

In arbitration, discovery is not so broad.Indeed, the amount of discovery used in litigationwas never contemplated to be a part of arbitra-tion. The AAA rules provide for the exchange ofinformation (i.e., documents) and don’t refer todiscovery or depositions (except for the Large,Complex Case Procedures). The rules leave it tothe parties and the arbitrator to fashion theamount of discovery appropriate for the dispute.

Thus, arbitrators expect the parties to agree tovery limited discovery and where they disagree,

the arbitrator can and should streamline theprocess. This is necessary to curtail costs.

When discovery disputes arise in arbitration,and they do, they are handled more informallythan in litigation, so resolving the dispute costsmuch less. They are usually resolved in telephoneconference with the arbitrator or by a writtenorder from the panel chair.

i. Absence of Third-Party Discovery. An importantdistinction between litigation and arbitration con-

cerns discovery of information inthe hands of third parties. Article7 of the FAA authorizes arbi-trators to issue subpoenas for wit-nesses to appear at the final hear-ing, and bring documents alongwith them.13 Some jurisdictionshave interpreted this provision topermit third-party discovery.14

However, some federal appealscourts have not authorized pre-hearing document discovery fromthird parties.15 They have inter-preted Article 7 to mean that thewitness can only be required tobring documents when he or shetestifies as a witness before thearbitrators.16 This area is con-stantly evolving, so arbitrationadvocates should determine thelaw on third party discovery inthe locale where arbitration iscontemplated or pending.

h. Final Hearing

We have alluded to the expertise of the arbi-trators (as opposed to jurors and some judges)and the confidentiality of the hearing versus thepublic nature of a trial. We have discussed thefact that rules of civil procedure do not apply inarbitration, making arbitration a process ofchoice and more informal. There are, however,other differences between a trial and an arbitra-tion hearing.

i. Venue. In litigation, venue is determined bythe facts and rules of procedure. When it is con-tested, the resolution of the dispute can be tiedup in controversy, including appeals, for years ata time.

Venue is determined differently in arbitration.The parties to the arbitration can agree on venuein their arbitration agreement or during the arbi-tration at an early preliminary conference. If notpredetermined in the contract, venue normallywill be based on the convenience of the parties. Inan arbitration under the AAA Commercial Ar-bitration Rules, if the parties cannot agree on the

In arbitration,discovery is

not so broad.Indeed, the

amount of dis-covery used in litigation

was never con-templated to be a part of arbitration.


locale of the hearing, the AAA will make that deci-sion.17 In a construction dispute, under Rule R-12of the recently amended AAA Construction In-dustry Arbitration Rules, if the parties cannotagree on venue, the hearing will be held in thecity nearest the project in dispute, subject to thearbitrator’s approval.

As for the location of the hearing, it usuallytakes place in a conference room, the arbitrator’soffice, or a hearing room specifically provided bythe service provider, almost never a courtroom.

ii. Presentation of Evidence in Arbitration. Sincearbitrators are not bound by specific rules of evi-dence, the parties have greater flexibility withregard to the presentation of evidence. Thismeans that hearsay can be introduced, as well ascopies of business records. In addition, efficiencytechniques can be used to introduce evidence,techniques that would not be permitted in acourtroom but which are very effective.

Most arbitrators are open to new ideas to makethe arbitration process more efficient. And AAAarbitrators are trained to give affidavit evidencethe weight it deserves in light of the adversary’sobjections.18

ConclusionThere has always been a need to have disputes

addressed fairly but in a faster, less costly way thanthe court system allows. That need is even greaterin the current economic downturn as companiesseek to make the dollars allocated to dispute resolu-tion more productive. Counsel can achieve clientgoals by using arbitration. To make good use ofarbitration, counsel must understand the core con-cepts that distinguish it from litigation.

Arbitration is flexible. It allows the parties todetermine most procedural aspects of the process,including the scope of discovery. Litigation doesnot. Arbitration allows the parties to select anexperienced decision maker or panel and to enterinto a private agreement to keep the arbitrationand its outcome confidential. Litigation does not.In addition, arbitration allows the parties to set ahearing date that is months (not years) away andto agree on steps that should make the processmore efficient. These are just a few advantagesthat arbitration has over litigation. How to makethe most of these advantages to make arbitrationmore efficient and cost effective is the subject ofPart II of this article. n

ENDNOTES1 R-21 “Exchange of Information,”

AAA Commercial Arbitration Rules,available online at www.adr.org.

2 For a complete discussion of theoptions available to parties when draft-ing alternative dispute resolution claus-es, see “Drafting Dispute ResolutionClauses: A Practical Guide,” availableonline at www.aaauonline.org/refer-encecenter.aspx?cid=1.

3 See Hall Street Assoc. v. Mattel,Inc., 128 S. Ct. 1396 (2008) (holdingthat the grounds stated in Section 10of the FAA are the exclusive groundson which a party may seek to vacate anaward under the FAA). Nevertheless,parties may agree to a private appellatearbitration process if an appeal right isimportant to the clients.

4 See, e.g., AAA Large, ComplexCase Procedures, L-2, which providesthat in disputes over $1,000,000,“three arbitrator(s) shall hear anddetermine the case” if the parties areunable to agree on the number of arbi-trators.

5 See also Canons IX and X of theAAA-ABA Code of Ethics for Arbitra-tors in Commercial Disputes, availableat www.adr.org and www.abanet.org/dispute/commercial_disputes.pdf.They provide that party-appointed

arbitrators shall be presumed neutral.If they are not neutral, they mustinform the parties and other arbitra-tors.

6 9 U.S.C. § 1, et seq.7 For example, Rule R-23 of the

AAA Commercial Arbitration Rulesstates that “[a]n award shall not bemade solely on the default of a party.”

8 See R-4(a)(1). See also R-5 (initia-tion under a Submission).

9 See R-30(a).10 Sherrock Bros. Inc. v. Daimler

Chrysler Motors Co., LLC, No. 06-4767,2008 WL 63300 (3rd Cir. Jan. 7, 2008)(confirming award granting summaryjudgment motion under AAA commer-cial rules); see also Schlessinger v.Rosenfeld, Meyer & Susman, 47 Cal. Rptr.2d 650 (Cal. Ct. App. 1995); IntercarbonBermuda, Ltd. v. Caltex Trading & Tran-sport Corp., 146 F.R.D. 64 (S.D.N.Y.1993); Stifler v. Seymour Weiner, 488A.2d 192 (Md. Ct. App. 1985); Campbellv. American Family Life Assurance Co. ofColumbus, Inc., 613 F. Supp. 2d 1114(D. Minn. 2009).

11 See the Sherrock Bros. and Inter-carbon cases, supra, n. 10.

12 See Campbell, supra, n. 1013 Article 7 of the FAA provides that

the arbitrator “may summon in writing

any person to attend before them or anyof them as a witness in the proper caseto bring with him or them any book,record, document, or paper which maybe deemed material as evidence in thecase.”

14 Third-party discovery in arbitra-tion has been upheld in Security LifeIns. Co, 228 F. 3d 865 (8th Cir. 2000);Illinois, in Amgen, Inc. v. Kidney Ctr. ofDel. County, Ltd., 879 F. Supp. 878(N.D. Ill. 1995); Meadows Indemnity Co.v. Nutmeg Ins. Co., 157 F.R.D. 42(M.D. Tenn. 1993); Stanton v. PaineWebber Jackson & Curtis, Inc., 685 F.Supp. 1241 (S.D. Fla. 1988). But seeKennedy v. American Express TravelRelated Serv. Co., Inc., No. 09-61157,2009 WL 2488298 (S.D. Fla. Aug. 12,2009).

15 See, e.g., Hay Group, Inc. v.E.B.S., Acquisition Corp., 360 F.3d 404(3d Cir. 2004).

16 Life Receivables Trust v. Syndicate102 at Lloyd’s of London, 549 F. 3d 210(2d Cir. 2008) (barring document dis-covery from entities that are not par-ties to the arbitration proceeding).

17 Rule R-10.18 R-32(a) of the AAA Commercial

Arbitration Rules.


How parties should approach arbitrator selection and the preliminaryconference in order to set the stage for an efficient and fair process.

Parties to arbitration expect that they will have a full and fair opportunity topresent their claims and defenses and the supporting evidence to the arbi-trator. But when a commercial case is large or complicated in that it

involves multiple parties, difficult or unusual features, or simply a large amount ofmoney, everyone involved—the parties, their counsel and the arbitrators—muststrive in earnest to keep costs down and avoid unnecessary delay while ensuring afair process. Achieving these dual—and seemingly conflicting—goals requiresforesight and planning during the initial stages of arbitration.


APPOINTING QUALIFIED ARBITRATORS ANDSTAGING THE PRELIMINARY CONFERENCE

By Raymond G. Bender Jr.

MR. BENDER IS A MEMBER OF THE LAW FIRM OF DOW LOHNES, PLLC, IN WASHINGTON, D.C. HE PRACTICES IN THE

TELECOMMUNICATIONS, MEDIA, AEROSPACE, AND IT INDUSTRY SECTORS. HE SERVES AS AN ARBITRATOR IN

DOMESTIC AND INTERNATIONAL ARBITRATIONS, INCLUDING THOSE INVOLVING COMPLEX COMMERCIAL DISPUTES.

HE IS THE AUTHOR OF “CONDUCTING SATELLITE INDUSTRY ARBITRATIONS UNDER THE WATCHFUL EYE OF THE

INTERNATIONAL TRAFFIC IN ARMS REGULATIONS,” PUBLISHED IN THE NOVEMBER 2006-JANUARY 2007 DISPUTE

RESOLUTION JOURNAL. HE CAN BE REACHED AT 202.776.2758 OR VIA E-MAIL AT [email protected].

CRITICAL FIRST STEPS INCOMPLEX COMMERCIAL ARBITRATION

The first two steps of arbitration are selectingthe arbitrator and participating in one or morepreliminary conferences. Selecting the right arbi-trator and adopting suitable procedures to governthe proceeding are important in every case. Butthey are even more critical in a large or complexcase because of the many ways in which the pro-ceeding can be delayed.

The American Arbitration Association (AAA)considers a case to be large and complex enoughto warrant application of its Large, ComplexCase Procedures if it involves a claim or counter-claim of at least $500,000, exclusive of claimedinterest, arbitration fees and costs.1 But I am

using the term “complex” in a broader sense thanthe value of the parties’ claims and counterclaims.Thus, a complex case could mean one thatinvolves technical or scientific facts, or numerousor difficult legal issues. A case that involves tech-nical facts would require the assistance of experts(such as accountants, engineers, or scientists) toelucidate these facts for the arbitrator or panel. Acomplex case in the sense discussed here alsocould involve multiple parties. Multiple partyarbitrations generally present scheduling difficul-ties and involve the filing of more motions anddiscovery requests, which can lead to disruptionand delay unless appropriate measures are taken


to keep the case on a steady course. A complexcase could also be an international dispute involv-ing persons from different countries who speakdifferent languages and have different culturalbackgrounds. Language differences alone areenough to complicate an arbitration and make itmore expensive if translation services arerequired. Differences in cultureand legal systems often lead to dif-ferent expectations for the arbitra-tion. This could include differentexpectations about discovery orother procedures, even whethercertain forms of discovery shouldbe allowed at all.

If your arbitration is complex inthe sense described here, youshould concentrate on the twotasks discussed below in order toselect an appropriate arbitratorand work out procedures to ensurethat the arbitration is conductedefficiently and fairly.

The Number of ArbitratorsThere is no more important

duty at the outset of a complexarbitration than to select the bestpossible arbitrator to hear thecase. “Best possible” in this con-text means the arbitrator has therequisite qualifications and experi-ence to understand the facts andissues in the case and the casemanagement skills to see that itproceeds efficiently and does notget sidetracked.

The number of arbitrators (oneor three) and the method of arbitrator selectionare often specified in a contract’s arbitrationclause. When three arbitrators are contemplated,the arbitration clause frequently provides thateach party appoints one arbitrator, and the twoparty-appointed arbitrators name the third arbi-trator who shall serve as the chair of the panel. Atother times, the arbitration clause provides thatthe arbitration will be governed by the arbitra-tion rules of a particular arbitral institution, suchas the AAA. In that situation, the rules of the des-ignated institution will govern the number andselection of the arbitrators.

Once a dispute has arisen, the parties may havestrong feelings about how many arbitratorsshould hear the case. If they specified a singlearbitrator in the arbitration clause, they couldagree after a dispute arises to have three arbitra-tors instead. If they agreed to AAA rules, those

rules would determine whether there would beone or three arbitrators. Before proceeding fur-ther, certain general observations are in orderconcerning the number of arbitrators needed tohear and resolve a dispute in arbitration.

In general, relatively simple or routine com-mercial disputes are readily handled by a single

arbitrator. This is the most effi-cient and cost-effective way to dealwith these disputes. But that maynot be the case for a high-stakescontroversy involving a large mon-etary amount, legal or technicalcomplexities, or other unusual fea-tures, despite the added cost ofhaving to pay three arbitratorsinstead of one.

The AAA’s Large, ComplexCase Procedures provide for theappointment of a three-member tri-bunal when the parties are unableto agree on the number of arbitra-tors and a claim or counterclaiminvolves at least $1 million. Manyinternational arbitration rules callfor consideration of the circum-stances of the dispute, particularlyits complexity and the amount inissue, in deciding whether toappoint one or three arbitrators,without specifying any monetarythreshold.2 Some international rulesdefault to the appointment of threearbitrators whenever the partiescannot agree on the number ofarbitrators, probably in recognitionof the inherent complexity of inter-national disputes.3

The principle that complexity in a case war-rants appointing three experienced arbitrators issound because complex facts or issues may requiredifferent kinds of expertise or perspectives thatwould be hard to find in a single arbitrator, andeven if one could locate such an arbitrator, he orshe might not be available to hear the case.

Three bright minds would contribute differentperspectives to the deliberative process, as well asdistinct expertise, experience and judgment. Thiscould, at the very least, create confidence that theultimate decision on the merits will be a soundone, and that no important considerations will beoverlooked.

Thus, presenting a complex dispute to threearbitrators rather than one provides greater as-surance that the case will be heard by neutralswho collectively have the knowledge and experi-ence necessary to decide the case in a fair and

2 F E B R U A R Y / A P R I L 2 0 0 9

I am using theterm “complex”

in a broadersense than the

value of the parties’ claimsand counter-

claims. Thus, acomplex case

could mean onethat involvestechnical or

scientific facts,or numerous or difficultlegal issues.

thoughtful manner. (This is probably also true ofarbitrators appointed by an arbitral institutionbecause the parties normally have input into thequalifications of the arbitrators the institutionultimately names.)

Using a single arbitrator is obviously less ex-pensive and more efficient (it is easier to arrangeschedules with one arbitrator than with three).But these benefits could be lost if the partiesagree to conduct very broad discovery, includingnumerous depositions, and file an assortment ofjurisdictional, discovery and/or other motions.

If three arbitrators are used, certain efficien-cies still could be realized. For example, the par-ties could agree that the chair of the panel woulddecide routine discovery disputes, and the chairwould then spread the rest of the workloadamong the co-arbitrators.

After the hearing on the merits and the paneldeliberates, the chair could divide the responsi-bility for drafting a reasoned award in a complexcase among the arbitrators, assigning to the mostknowledgeable the issues with which that personis most familiar. This could result in a final writ-ten award much sooner than if a single arbitratorhad to write the entire award.

Because appeals of arbitration awards are typi-cally limited in scope, parties tend to be morecomfortable with the relative finality of an awardwhen three skilled and experienced arbitratorsdecide the dispute.

In every arbitration, when it comes to thenumber of arbitrators, the parties must considerwhether the advantages of a three-member tribu-nal are worth the extra costs involved and thepotential for delay due to scheduling problems.Some large complex cases are of sufficient magni-tude that these costs seem relatively minor andare easily outweighed by the benefits of appoint-ing a three-member panel.

Arbitrator QualificationsOne advantage of arbitration over court litiga-

tion is the parties’ ability to select the arbitrators.Once a dispute has arisen and arbitration plead-ings have been filed, the time will come for theparties to make the selection decision. In order tomake a first-rate appointment, the parties’ coun-sel should know much more about their case thanthey ordinarily would know at this point in litiga-tion. They should understand the claims, coun-terclaims, defenses, facts and issues in the caseinside out. Only then can they make the vitallyimportant judgments involved in selecting notjust a competent arbitrator, but the best possiblearbitrator to hear their case.

Initially, the parties must decide what qualifica-

tions the decision makers should have. Arbitrationproviders maintain a roster of arbitrators whopossess business or legal experience in a variety ofindustries. The AAA panel, for example, includesarbitrators with expertise in commercial, finance,employment, patent construction, securities,health care, real estate and more.4 The AAA alsohas an international panel and a large, complexcase panel with arbitrators who have a “minimumof 15 years of business or professional practiceinvolving complex legal or business matters.”5

In an arbitration administered by the AAA, theparties’ counsel generally would discuss the quali-fications they would like the arbitrators to haveduring an administrative telephone conferencewith the AAA case administrator, who wouldthen prepare a list of candidates with the desiredqualifications.6

Two attributes every arbitrator should haveare impartiality and neutrality—characteristicsthat mean that the arbitrator has integrity andcan issue an unbiased decision. These attributesare required by ethics rules governing commer-cial arbitrators.7

Other qualifications that parties could requirearbitrators to possess are discussed below.

Knowledge of the Industry. Industry knowledge isusually held by a person who retired from theindustry in question or switched out of thatindustry into law. Industry arbitrators are familiarwith the field in which the dispute arose and gen-erally understand the facts in a case fairly quickly.They do not need as much time as lay individualswould to get up to speed in order to be able tounderstand the evidence and decide the dispute.

Knowledge of the Applicable Law. Knowledge ofthe law is generally held by lawyers who repre-sent members of the industry in issue. When acase involves contractual, legal and regulatoryissues, lawyers with expertise in the type of trans-action involved and the legal and regulatory envi-ronment are obvious choices to serve as arbitra-tor. They will understand the issues more quicklythan other types of arbitrators. For example,when the claims arise out of a complex corporatemerger or acquisition, it makes sense to appointat least two M&A attorneys, or attorneys experi-enced at negotiating asset and stock purchaseagreements. When a complex business-to-busi-ness dispute involves a regulated industry, liketelecommunications, the arbitrators should be ex-perts in the applicable law and regulations whohave experience advising companies in that field.Similarly, disputes involving the aeronautics andspace industries are best resolved by arbitratorswho are aeronautics or satellite attorneys, or oth-ers with education, training and experience in



those areas.Technical Knowledge. Many complex commer-

cial cases involving a technical subject matter orcomplex facts benefit from having a technicalexpert (for example, an engineer, architect,accountant, or other specialist) as the arbitratoror a member of the panel. Expert arbitratorsoften advise the attorney-arbitrators on the panelhow the technical issues should affect the out-come of the case. For example, in a complex con-struction dispute, it might be advisable to have anengineer on the panel who could explain to theconstruction lawyers on the panel why a particu-lar construction material failed and who shouldbe held responsible for that failure. In the M&Ahypothetical discussed above, it might be prudentto have a tax lawyer, certified public accountant,financial advisor, or investment banker on thepanel along with the M&A attorneys. Sometimes

it is possible to find industry, legal and technicalknowledge in the same person.

In complex international cases, the arbitratorsshould be experienced international arbitratorswith a broad background in international busi-ness affairs. These arbitrators know the differ-ences between the practices of different legal sys-tems (e.g., the inquisitorial practice of the civillaw system versus the adversarial practice of thecommon law system); they have experience arbi-trating disputes between parties with differentcultural backgrounds and languages; and they arefamiliar with international arbitration concepts,like lex mercatorio, competence-competence,among other principles, and with internationallaw and treaties.

Business Acumen. Good arbitrators should havepractical business sense. The importance of thisqualification should not be underestimated, but itis hard to detect from an arbitrator’s curriculumvitae. Conducting a joint interview of the arbitra-tor candidates may be the best way to discern thistrait.

Judicial Temperament. As an adversarial pro-cess, arbitration is similar to a judicial proceed-ing, albeit a less formal one. Since arbitratorsmake binding decisions that will affect the par-ties, their demeanor should be professional at alltimes. Arbitrators, like judges, should possess a“judicial temperament.” The American BarAssociation defines this term (in the context of

evaluating judicial nominees) as having “compas-sion, decisiveness, open-mindedness, courtesy,patience, freedom from bias, and commitment toequal justice under the law.”8

The most desirable arbitrators show respectfor all participants in the arbitration, and conductthe proceedings fairly and even-handedly. De-termining whether a candidate for an arbitralappointment possesses a judicial temperament isnot always easy. It too cannot be discerned froman arbitrator’s résumé and may not be apparentfrom an interview. The best course of action is tomake discreet inquiries to friends and profession-al colleagues about the reputation of the arbitra-tors under consideration.

Case Management Skills. Arbitration providersare emphasizing the need for case managementskills and some, like the AAA, require regular train-ing of the arbitrators on their roster. Good arbitra-

tors have strong case management skills. Laid-backindividuals who are not pro-active about managingthe process are not considered desirable in today’sarbitration environment. Arbitrators need to beable to persuade strong-willed parties and attorneysto agree to certain procedures to keep the case ontrack and on schedule. Good case management notonly contributes to an orderly arbitration process,it helps to control costs, a subject of increasingconcern to parties.

Arbitrators must be able to deal with unan-ticipated events, scheduling difficulties, con-tentious parties and attorneys, among other chal-lenges. This means they need organizational anddiplomatic skills, a calm demeanor, an under-standing of human behavior, and the ability to becreative and flexible.

Once the arbitrators are appointed, virtuallyevery aspect of the proceeding demands pro-active management, from setting the date for thefirst preliminary conference to setting the sched-ule for the hearing and adhering to it to avoiddisruption and delay.

Role of the Chair of the Panel. It is vital that thechair of the panel have excellent managementskills, since the chair assumes a greater responsi-bility for guiding the conduct of the case. Retiredjudges are often thought to have good case man-agement skills, but that should not be assumed.Former judges may be too comfortable with stan-dard litigation procedures to object when counsel

4 F E B R U A R Y / A P R I L 2 0 0 9

Arbitrators need to be able to persuade strong-willed parties and attorneys to agree to certain pro-cedures to keep the case on track and on schedule.

seek to use delaying pre-hearing procedures inarbitration.

Managing the Preliminary ConferenceOnce the arbitrator or panel has been duly

appointed, the attorneys must prepare for arbi-tration’s next key event—the preliminary confer-ence. The meeting itself could be held by tele-phone or in person, depending on the location ofthe parties, counsel and arbitrators. At this meet-ing, the arbitrators and counsel make importantdecisions that will shape the course of the pro-ceedings to come. A principal objective of thepreliminary conference is to discuss the require-ments for pre-hearing briefs and the date fortheir submission, the amount of discovery thatshould be allowed and the discovery completiondate, the date for exchanging witness lists anddocumentary evidence, the length of the hearingon the merits, and whether the case warrants theexpense of preparing post-hearing briefs.

Experienced commercial arbitrators generallyhave a standard agenda and/or checklist of itemsto be addressed at the preliminary conference ina complex case. Often, arbitrators will e-mail theparties’ attorneys to ask them to confer in goodfaith prior to the preliminary conference so thatthey can reach an agreement on as many pointsas possible. This request signals to the attorneysthat they have a good deal of preparation to dobefore the preliminary conference. The arbitra-tors also generally request that the attorneysbring to the preliminary conference their own listof agenda items and be prepared to present theirclients’ views of the case.

At the preliminary conference the arbitratorswill go through their agenda, noting whether theparties have reached agreement on each item.When no agreement is reached, or the agreementreached would interfere with an efficient process,pro-active arbitrators will offer useful suggestionsto encourage a compromise, or simply decide theissue themselves. The arbitrators will also addressthe agenda items raised by the attorneys.

Set forth below is a fairly typical list of agendaitems for a preliminary conference in a complexcommercial arbitration.9 The list begins withsome important threshold questions.

• Does the arbitration involve any issue con-cerning arbitral jurisdiction, arbitrability ofany claims, counterclaims or defenses, orenforceability of the arbitration agreement?

• Do the parties agree on the law and rulesgoverning the arbitration process; and onthe substantive law that will apply to themerits of the case?

• Are there additional parties with an interestin the dispute who should be notified of thearbitration or have an opportunity to partic-ipate in it?

• Are there any other special issues that needto be addressed? For example, disputesinvolving trade secrets or proprietary busi-ness information will require special ar-rangements during discovery and the hear-ing to protect against unwarranted disclo-sure. The arbitrators may encourage theparties to enter into a non-disclosure agree-ment or ask their counsel to draft a protec-tive order for the arbitrators to sign.

Motions. Do any of the parties contemplate sub-mitting any motions on jurisdiction, arbitrability,summary disposition, or interim relief? If so,counsel should be prepared to discuss a briefingschedule so that these issues can be briefed anddecided as early as possible in the proceedings.

Document Discovery. The arbitrators will deter-mine how much discovery is allowed and set adate for the completion of discovery. Counselshould be prepared to discuss their clients’ discov-ery needs at the preliminary conference. Thismeans knowing, among other things, the identityof persons from whom documents will be sought.If documents need to be obtained from non-par-ties, counsel must know whether they reside with-in subpoena range, and whether the law in thejurisdiction allows documents in the hands ofthird parties to be discovered prior to the hearing.

Counsel should also know whether theirclients intend to seek discovery of electronicallystored information, since this can significantly in-crease the cost and time spent on discovery. If theanswer is yes, counsel should be required to spec-ify the ESI, demonstrate that it is not available inanother form, and that it is highly relevant to theissues in the case.

Depositions. Depositions are commonly used inlitigation but are less common in arbitration. In acomplex commercial case, arbitrators often en-courage the parties to agree to take only a fewdepositions. When the parties cannot agree, orthey agree to a large number of depositions, pro-active arbitrators generally will limit the numberof depositions to a few key witnesses and limithow much time they may take (for example, halfa day for each deposition). Then the arbitratorswill schedule a date for their completion.

Discovery Disputes. The arbitrators will deter-mine the procedure for resolving discovery dis-putes. One procedure is to use a telephone con-ference. Another is to have the parties write a let-ter to the panel instead of filing a formal motion.



Often the parties agree that the chair of the panelwill decide discovery disputes, subject to a party’sright to present to the full panel any dispute thatis critical or affects the parties’ substantive rights.At the preliminary conference, the arbitratorswill set a date for the submission of all discoverydisputes.

Location and Dates for the Hearing. If the arbi-tration agreement does not specify the locationwhere the hearing will be held, this topic will bediscussed and decided at the preliminary confer-ence. Arbitrators usually take intoaccount any reasons for havingthe hearing in one place overanother, including convenienceto the parties and witnesses andminimizing the expense of traveland accommodations.

The arbitrators also will ad-dress the dates for the hearing.The attorneys should be preparedto estimate how much time theywill need to present their case. Itis less costly to set aside consecu-tive days or blocks of consecutivedays for the hearing since this willminimize the number of timesthat counsel and the parties willhave to spend preparing to pres-ent their case.

The arbitrators will also makedecisions about how long each hearing day will be.

The arbitrators may raise other issues at thepreliminary hearing, such as whether the casewould benefit from bifurcating the liability issuesfrom the damages portion of the case. Bifurcatingthe hearing in this way can reduce the cost of thearbitration, particularly if evidence concerningdamages is extensive or complex.

Witness Testimony. Counsel should also be pre-pared to discuss at the preliminary conferencepossible ways to increase the efficiency of thehearing. One option is to submit written witnessstatements in lieu of giving oral direct testimonyat the hearing. The statements are usually draftedby counsel for the proponent of the witness.Under this procedure, the witness does not testi-fy on direct examination but must appear forcross-examination. If the parties agree to thisprocedure, the arbitrator will set a date at thepreliminary conference for the exchange of writ-ten witness testimony (and the exchange ofrebuttal witness lists, if needed).

Another cost-saver that could be considered isthe use of video conferencing to allow witnessesto testify from distant locations. Savings in travelcosts can be significant.

Another option is videotaping the depositionof a witness and using that instead of live testi-mony at the hearing. This technique is generallyused only for minor witnesses, or witnesses whowould be unavailable to testify at the hearing.However, it should only be used when all counselhave had the opportunity to cross-examine thewitness.

Arbitrators may raise at the preliminary con-ference whether to restrict counsel’s communica-tions with the client’s witnesses during cross-

examination by opposing counsel.Restrictions of this sort are aimedat maintaining a fair process andpreventing counsel from exertingundue influence over the testimo-ny of their own witnesses.

Another issue that could arise atthe preliminary hearing is whetherthe arbitrator should order thesequestration of lay witnesses. Theissue arises in complex casesbecause of concerns that a witnesspresent at the hearing could beinfluenced by the testimony ofother witnesses. Arbitrators nor-mally will order witnesses to besequestered if requested by aparty, unless the other partydemonstrates good cause. In thecase of corporate parties, arbitra-

tors usually allow at least one party representativeto be present during all the testimony.

Experts. Experts are commonly needed in tech-nical cases to present factual data or analysis forthe panel’s consideration. To control costs, theparties could agree jointly to retain a singleexpert to report on specific technical matters indispute. In highly technical arbitrations where itmight not be feasible to use a single expert, thearbitrators could suggest that the experts testifysimultaneously—a procedure known as an “ex-pert witness panel.” This procedure allows theexperts to comment on each other’s testimony,and affords the arbitrators an opportunity to posequestions to them both.

The arbitrators will set a date at the prelimi-nary conference for the exchange of all expertreports. To streamline the proceedings, the arbi-trators could ask the parties to have their expertsmeet with each other prior to the hearing to tryto narrow the issues in dispute. The experts alsocould be asked to jointly prepare a list of pointsof agreement and disagreement.

Hearing Exhibits. The arbitrators will also set adate for the exchange of exhibits (including re-buttal exhibits). Arbitrators often ask the parties

6 F E B R U A R Y / A P R I L 2 0 0 9

The variety ofissues that

can come up at preliminary con-ferences showhow importantorganization and advanceplanning are

to the process.

to provide them with a loose-leaf book contain-ing joint exhibits (i.e., exhibits that both partiesintend to introduce), and separate books forother exhibits. In arbitrations with a large num-ber of exhibits, as is typical in complex cases,arbitrators often require all exhibits to be markedand numbered in advance of the hearing.

Briefs. Pre-hearing briefs should inform thearbitrator of each party’s position and its view ofthe facts and the law. Many arbitrators think theyare valuable while others do not. I personallythink they are vital in all but the smallest case.

At the preliminary conference, the arbitratorwill establish a date for the exchange and submis-sion of pre-hearing briefs. Arbitrators sometimelimit the length of these briefs, depending on the

complexity of the case. Page limits can encouragecounsel to focus on the most critical issues.

Post-hearing briefs are another matter thatcould be discussed at the prehearing conferencebut they do not need to be scheduled at that time.That task can be deferred until the close of thehearing. Whether post-hearing briefs are neces-sary should depend on the circumstances of thecase. In large or complex cases, they could be quitehelpful to the arbitrator and worth the extra cost.

Oral Argument. The attorneys usually desire tomake an opening statement at the beginning ofthe hearing to summarize the client’s principalclaims and defenses and indicate, from theirclient’s perspective, what the evidence will show.Opening statements can provide a useful roadmap for the arbitrator in a complex arbitration.

Some arbitrators, particularly those who thor-oughly prepare for the hearing, may find openingstatements to be unimportant and unnecessary. Ifan attorney insists on making an opening state-ment, the arbitrators could limit the presenta-tions by each side, say to 20-30 minutes, consis-tent with the nature of the case.

Post-hearing oral arguments may also bebroached at the preliminary conference, but adecision on that matter can be deferred until justbefore the close of the hearing.

Type of Award. Some parties provide in theirarbitration agreement for the type of award theywould like the arbitrators to issue. The arbitra-tors should take note of the parties’ wishes for

the type of award when reading the arbitrationagreement for the first time prior to the prelimi-nary conference.

If a reasoned award is requested, the arbitra-tors should inquire into the parties’ specificexpectations. Do they want a simple award stat-ing who prevails on the various issues and therelief awarded, if any; a brief explanation of theaward; or a more detailed, reasoned award in-cluding findings of fact and conclusions of law?The AAA rules require an explained award to berequested in writing prior to appointment of thearbitrator. However, this does not preclude thearbitrator from inquiring at the preliminary con-ference as to the type of award the parties desireif they have not already agreed on the type of

award they want. Parties to large, complex casesand international disputes frequently opt for areasoned award. The arbitrators might inquirewhether the parties want a reasoned award to bein a particular format, or be limited in length.The longer it is, the more it will cost.

Other Matters. There are a number of other mat-ters that can come up at a preliminary conference.One item is whether the parties want a stenograph-ic record of the hearing. If they do, one of the par-ties must arrange for a stenographer. Having arecord of the hearing can help the arbitratorsreview the record during deliberations. It can alsobe helpful to counsel during the preparation ofpost-hearing briefs. Arbitrators normally inquire atthe preliminary conference whether the parties willbe arranging for transcription and if they haveagreed to share transcription costs.

Sometimes one or more parties or witnesseshave a disability and need wheel-chair access,audio-visual equipment, or other special technol-ogy. Or there could be language barriers requir-ing one or more interpreters. These mattersshould be discussed at the preliminary conferenceso that appropriate arrangements can be madeprior to the hearing.

Following each preliminary conference (therecan be more than one in a large, complex case),arbitrators frequently prepare a formal ordermemorializing the items agreed upon, arbitralrulings on disputed issues, a detailed schedule ofpre-hearing activities and the dates for their com-


Because decisions reached at a preliminary conferencewill shape the future course of the arbitration, the

attorneys and the arbitrators need to work cooperativelyto adopt practical procedures and a workable schedule.


pletion, and the date for the hearing to begin.Some matters may remain unresolved and will

be taken up at a subsequent preliminary confer-ence, which could be scheduled at the arbitrator’sdiscretion, or at the parties’ request.

The variety of issues that can come up at pre-liminary conferences show how important organ-ization and advance planning are to the process.An arbitration is likely to be long and expensiveunless all of these issues are addressed at the out-set and the arbitrator determines (often with theagreement of the parties) how they will be han-dled. Otherwise, disputes will be inevitable andlead to delay down the line.

Because decisions reached at a preliminaryconference will shape the future course of thearbitration, the attorneys and the arbitrators needto work cooperatively to adopt practical proce-dures and a workable schedule.

ConclusionsA large or complex commercial arbitration

may be challenging for even the most experi-enced and adept participants. When the stakes

are high—because the amount in controversy islarge or the issues are novel or complex—arbitra-tion must be approached flexibly to control thecost, minimize the risk of disruption and delay,and provide a fair opportunity for each party topresent its case. These aims can be furthered byselecting arbitrators who bring relevant industryexperience, knowledge of the applicable law,business acumen, arbitration training and experi-ence (international, if needed), a judicial tem-perament, and case management skills attested toby others who have worked with them.

The attorneys also bear responsibility for ensur-ing that the arbitration will proceed in a fair andefficient manner. They should be prepared toresolve all the issues that come up and make rea-sonable compromises to streamline the processwithout sacrificing the development of the record.In arbitration, fairness can be achieved withoutburdening the process with wasteful trappings ofcourt litigation. The advantage of arbitration is thatits first critical steps, if handled skillfully, shouldlead to a fair and efficient process free from thedelay and enormous cost of litigation. n

8 F E B R U A R Y / A P R I L 2 0 0 9

1 These rules are available at www.adr.org. Parties to a case that qualifies asa large, complex case under these rulesare not required to use them. The par-ties are free to opt out of them or modi-fy them to meet the needs of their case.

2 See e.g., ICDR International Dis-pute Resolution Procedures, art. 5 (con-siders the “complexity or other circum-stances of the case” as well as its “largesize”); London Court of InternationalArbitration Rules, art. 5 (considers “allthe circumstances of the case”) and FAQNo. 27 (considers the “sum in issue”);International Chamber of CommerceRules of Arbitration, art. 8 (one arbitra-tor is appointed “save where it appearsto the Court that the dispute is such towarrant the appointment of three arbi-trators”; Article 8 does not mention thecriteria for deciding on three arbitra-tors); Singapore International Arbitra-tion Center Rules, Rule 5.1 (takes intoaccount “the complexity ... or other rele-vant circumstances of the dispute, in-cluding the quantum involved); Stock-holm Chamber of Commerce InstituteRules of Arbitration (Stockholm Rules),art. 16, (considers “the complexity of thecase ... and other circumstances, includ-ing the “amount in dispute”); WorldIntellectual Property OrganizationArbitration Rules, art. 14 (looks to “all

the circumstances of the case”).3 See United Nations Commission

on International Trade Law (UNCI-TRAL) Arbitration Rules, art. 5 (“if ...the parties have not agreed that thereshall be only one arbitrator, three arbi-trators shall be appointed”); Interna-tional Center for Settlement of Invest-ment Disputes (ICSID) Convention onthe Settlement of International DisputesBetween States and Nationals of OtherStates, art. 37 (“Where the parties donot agree upon the number of arbitra-tors ... the Tribunal shall consist of threearbitrators); Stockholm Rules, art. 16(the tribunal shall consist of three arbi-trators unless the Stockholm Chambertaking into account various factors,decides that the dispute should be set-tled by a sole arbitrator).

4 AAA Guide to Complex Commer-cial Cases, 3-5, lists examples of themost frequently requested fields of ex-pertise in large, complex cases, includingaerospace, banking, data communica-tions, construction, employment, ener-gy, environmental, health care, insur-ance, intellectual property, internation-al, real estate, and retired federal andstate judges.

5 See Commentary, AAA Large,Complex Case Procedures, L-2 (Arbi-trators).

6 Id., at L-1 (Administrative Confer-ence).

7 See AAA-American Bar AssociationCode of Ethics for Arbitrators in Com-mercial Disputes, effective March 1,2004. Eric Tuchmann, “AAA/ABA Re-vised Code of Ethics Provides ImportantGuidance on Arbitrators’ Conduct,”Metropolitan Corporate Counsel, availableat www.metrocorpcounsel.com, stating:“The Code presumes all arbitrators areneutral, including party-appointed arbi-trators. This reverses the presumptionof non-neutrality for party-appointedarbitrators that was contained in the1977 Code.” Parties in certain domesticarbitrations in the United States mayprefer that party-appointed arbitratorsbe non-neutral and governed by the spe-cial ethics rules appearing in Canon X ofthe AAA/ABA Ethics Code.

8 ABA Standing Committee on theFederal Judiciary: What It Is and How ItWorks, 4 (ABA 2007).

9 The rules of some arbitral institu-tions provide a list of matters to be con-sidered at a preliminary conference andoffer other procedures for managingsuch conferences. See e.g., AAA Large,Complex Case Procedures, L-3 (Pre-liminary Hearing) and L-4 (Manage-ment of Proceedings).

ENDNOTES

Discovery in arbitrationis different from thevirtually unlimited dis-covery process used inlitigation. The reason isthat the arbitrator’sjob is to deliver afaster and less expen-sive process. This arti-cle discusses how arbi-trators handle discov-ery in arbitration andthe considerations theytake into account whendeciding how much andwhat type of discoveryto allow. It also dis-cusses the approachesto discovery taken inarbitration rules andthe Revised UniformArbitration Act.

By Charles J. Moxley, Jr.Charles J. Moxley Jr. is Of Counsel to Kaplan Fox & KilsheimerLLP, specializing in complex litigation and arbitration, and anadjunct professor of law at Fordham Law School. He is co-chair of the Legislation Committee of the New York State BarAssociation’s Dispute Resolution Section and regularly servesas an arbitrator and mediator. He has served on the AmericanArbitration Association’s Panel of Commercial Arbitrators forover 25 years. He can be reached at [email protected].

Discoveryin Commercial Arbitration:How Arbitrators Think

Discovery

W hen a case has been filed in federal orstate court, litigators generally have agood idea of what discovery will be

allowed. Federal and state rules of civil procedureset forth the standards for discovery in litigation,and a large body of case law elaborates on thesestandards.

Do we have anything similar in arbitration? Cancounsel and the parties know with reasonable cer-tainty how much discovery will be allowed in theircommercial arbitration? What kind of discovery istypically permitted? Are the answers to these ques-tions entirely within the discretion of the arbitrator?Is there a governing standard?



Given the confidentiality of arbitration, thereare generally no published arbitral decisions ondiscovery questions in arbitration. So in this arti-cle I set forth some tentative answers to thesequestions in the context of domestic commercialarbitration based on my personal experience as anarbitrator in over 125 commercial cases, the var-ied experience of arbitrators with whom I haveserved. I also discuss the relevant rules of theAmerican Arbitration Association (AAA) andother arbitration institutions, as well as the treat-ment of discovery in theRevised Uniform ArbitrationAct (RUAA).

Rationale for Discovery inArbitration

Arbitrators generally havethree primary objectives indeciding discovery disputes ina commercial case: (1) aspeedier disposition than inlitigation; (2) a less expensiveprocess than litigation; and(3) a fair opportunity for bothsides to prepare and try thecase. Satisfying each of theseobjectives depends in largemeasure on the amount ofdiscovery allowed in the arbi-tration. To obtain a speedierand less costly disposition,discovery, which consumesthe bulk of time and attorneyfees in litigation, needs to bemore limited than in litiga-tion. Yet the parties musthave the discovery they need for a fair hearing.

As a result, the discovery that is automatic andoften virtually unlimited in litigation is subject toclose scrutiny in arbitration. The arbitrationgoals cited above cause arbitrators to require theparties to justify the discovery they seek. There isa bedrock amount of discovery in arbitration,particularly the reasonable disclosure of the par-ties’ claims and defenses and the exchange of rel-evant documents. But beyond that, parties aregenerally only allowed to take depositions andserve interrogatories if they can demonstrate areal need for them. Of course, the parties’ coun-sel may agree to more extensive discovery, al-though that can compromise the two main bene-fits of arbitration.

Discovery in Commercial LitigationThe discovery phase in a multi-million dollar

commercial litigation typically takes years, not

months. First counsel for the parties prepare andserve very broadly worded document discoveryrequests that ask to see all documents “in connec-tion with or relating to” one subject or another.They also invariably prepare lengthy interrogato-ries and sometimes “requests to admit.” Theyhave to review and number their client’s docu-ments for document production purposes. Often,each side files objections to the other side’s docu-ment requests, which could include claims ofattorney-client privilege or attorney work prod-

uct. The parties could endup in protracted motionpractice fighting about thesedocuments. Meanwhile, eachside serves deposition no-tices on the other. It is notunusual to receive a dozenor even dozens of suchnotices. Attorneys for theparties commonly seek todepose everyone who mayhave relevant information,even if the testimony is like-ly to be cumulative or re-dundant. They don’t want toleave any stone unturned.

Litigators hate surprisesand they generally find itunacceptable to wait untiltrial to take the testimony ofimportant witnesses who arenot under their control.They typically seek to de-pose every witness whocould possibly show up attrial, even those who are

fully on the record in documents and hencewhose testimony is readily subject to cross-exam-ination.

Although depositions are scheduled formonths down the road, they rarely take place asscheduled because the attorneys or the witnessesare busy that day. It is common to defer deposi-tions multiple times. A year could go by and theystill have not been taken. Finally one party mayget fed up and seek an order compelling the com-pletion of discovery. If not, the judge may seethat this case is not moving forward and will takematters into his or her own hands. The processinitially developed to foster fair trials by avoidingunfair surprise at trial has taken on a life of itsown, one that eats up years of time and incurshuge expenses for each side, often without tellingcounsel much that they did not already knowfrom the documents and their own witnesses.

When depositions are taken, the lawyer taking

2 A U G U S T / O C T O B E R 2 0 0 8

To obtain aspeedier and less

costly disposi-tion, discovery

needs to be morelimited than in

litigation. Yet theparties must

have the discov-ery they need for

a fair hearing.

them may make the session as long as possible inorder to be sure to exhaust the deponent’s knowl-edge. Sometimes, depositions result in disputesthat have to go before a judge. This can occurwhen the deponent’s counsel directs the witnessnot to answer or unilaterally cuts short the depo-sition.

Meanwhile, each side “responds” to the other’sinterrogatories and requests to admit, usually bygiving the narrowest possible answer or no an-swer.

Discovery in ArbitrationThis is all very different in commercial arbitra-

tion. Arbitrators usually want the hearing to bescheduled within three to eight months. It wouldbe a rare arbitration, and a particularly large orcomplex one at that, in which the arbitratorswould be happy with an expanded hearing sched-ule that exceeds eight months. Arbitrators on thepanel of the American Arbitration Association(on which I serve) are trained to believe it is theirjob to deliver the expedited proceeding that arbi-tration promises and the parties bargained for.

Thus, arbitrators generally have a differentperspective on discovery. They do not want theparties to engage in a fishing expedition of thekind that is typical of discovery in litigation.They want to allow just enough discovery to per-mit each side to prepare and try its case, but nomore. Arbitrators have a strong belief that wit-nesses should testify only once, and that is at thehearing. So there is no need to incur the expenseof earlier (and generally protracted) depositions.

If a party reasonably needs to examine a per-son under the control of the adversary and asksthe arbitrator to order this witness to be pro-duced, the arbitrator will usually obtain theadversary’s agreement to produce the witness atthe hearing. Similarly, when the exigencies of acase require the testimony of a non-party witnesswho reside within subpoena-range of the hearing,the arbitrator will subpoena the witness but gen-erally only for purposes of the hearing (i.e., notfor a deposition).

When non-party witnesses reside beyond sub-poena range, they could still agree to testify, andwhen they do agree, arbitrators prefer to havethem testify live at the hearing. When it is diffi-cult getting them there in person, video-confer-ence technology makes it possible to have themvirtually present at the hearing. Testimony bytelephone, which involves little expense, is alsopossible and frequently used where it makes sensein the context of the particular case.

This does not mean that depositions are neverallowed in arbitration. That is not the case. If the

parties make a convincing case that a reasonablenumber of depositions of limited duration seemnecessary, arbitrators will generally permit them.

Despite their penchant for deposing every wit-ness, litigators who arbitrate have learned thatthey have the skills to capably cross-examine theother side’s witnesses without depositions. Toconduct the cross, they use the information theyhave learned from their informal investigation ofthe facts of the case, documents, witness lists andexpert reports exchanged before the hearing. Thehuge number of depositions typically taken in lit-igation is not as important as litigators have cometo believe.

What Is Reasonable?The amount of discovery reasonably needed to

arbitrate a particular case depends on the factsand circumstances. It is reasonable to need docu-ments specifically related to the dispute. It is alsoreasonable to need to know the particulars of theother side’s claims, defenses, purported damagesand the like. If requested, arbitrators will general-ly direct that such information be provided.

Arbitrators typically establish the idea at thepreliminary hearing that they expect counsel towork out any discovery issues that arise. Whenthe parties’ attorneys cannot resolve these issuesby themselves, arbitrators are prepared to directthem if necessary.

The Size of the CaseParties are increasingly submitting huge com-

mercial cases to arbitration. Cases in the tens andhundreds of millions of dollars and more are notuncommon. Some general counsel prefer to arbi-trate cases of all sizes for the opportunity it givesthem to pick a highly experienced arbitrator (orpanel of arbitrators) with knowledge of the sub-ject matter who can be selected with eyes open,rather than take a chance on the spin of the wheelin the court clerk’s office.

Some general counsels at large corporationshave stressed the importance of preserving thespeed and economy in arbitration. Yet some caseshave so much at stake that both parties may agreethat they want the “no stone unturned” approachto discovery in arbitration. This is their right sincearbitration is a process that belongs to the parties.

In large cases involving multiple issues, arbi-trators will generally recognize the need for moresubstantial document exchanges, and possiblymore than a couple of depositions and a limitednumber of targeted interrogatories. But theynonetheless try to keep the cases moving moreexpeditiously than would typically happen incourt.



The Easy CaseDiscovery is easiest when the parties’ arbitra-

tion clause specifies the scope of discovery. Occa-sionally the parties provide in their arbitrationclause that the federal or state rules of procedureshall apply to discovery in arbitration, resultingessentially in pseudo-litigation before a privatejudge. In my experience, this is relatively rare (Iwould say anecdotally that it occurs in fewer than5% of cases).

Arbitrators will apply the procedures specifiedin the parties’ arbitration agreement. However,they are not prevented fromtrying to “jawbone” the par-ties’ counsel into agreeingthat what they actually needis more limited discovery, notmore. (“Jawboning” is theterm I use for the practicemany arbitrators follow ofprobing for consensus onpre-hearing issues beforeruling on them.) Arbitratorswho educate themselvesabout the case can engage ina meaningful dialogue withthe attorneys about what dis-covery is reasonably neces-sary (as distinguished fromwhat they have stated isneeded) and then build on that foundation to cre-ate consensus on a reasonable discovery plan.

To do this effectively, arbitrators try to devel-op an early understanding of the case. This is oneof the reasons arbitrators invite counsel to discussthe case at the preliminary conference and atinterim conferences throughout the discoveryperiod. It is in counsels’ interest to project theircase as fully as possible whenever the opportunityarises.

The Most Typical CaseAlthough the parties could include the scope

of discovery in their arbitration agreement, theyrarely do. Usually the arbitration clause is silentas to the scope of discovery. However, if theagreement calls for arbitration by a particulararbitration institution or provides for arbitrationunder specific institutional rules, the institution’srules will be incorporated by reference, includingthe discovery provisions. (For example, an arbi-tration clause may provide for AAA arbitration orarbitration under the AAA Commercial Arbitra-tion Rules.)

Discovery is normally one of the issues on thetable at the first preliminary conference, which,in most instances, is conducted via a conference

call. In a commercial case, counsel for the partiesusually decide on the scope of discovery beforethe call is scheduled and advise the arbitrator oftheir agreement during the course of the confer-ence call. The attorneys commonly agree to ex-change relevant documents and to depose two orthree of the adversary’s witnesses.

Until a dispute arises, arbitrators generally willnot get involved in document production issues.The attorneys know their case and if they canagree on document discovery, great.1

As to depositions, arbitrators will considerwhether their use is reallyneeded. Why depose a wit-ness who lives within sub-poena-range of the hearingor a witness under the con-trol of the adversary? Coun-sel may need to be remindedthat arbitration is differentfrom litigation and has econ-omy and efficiency as two ofits goals. Often counsel willrespond to this by agreeingthat depositions are not nec-essary. Should this lead toconcern that they are merelybeing deferential to the per-son who will resolve the dis-pute? Theoretically that is

possible. But as a practical matter it should not bea concern if the attorneys understand that thearbitration process is supposed to be differentfrom litigation, the arbitration involves a disputebetween parties who are familiar with the mattersin contention, and the relevant documents andwitnesses will be available at the hearing.

When Both Sides Want DepositionsWhen cajoling by the arbitrator does not work

and both sides want to depose multiple witnesses,the arbitrator must step back and accept the ideathat there will be more, rather than fewer, depo-sitions in the case. But the arbitrator can contin-ue to try to limit their number and duration.

In the unusual case where this does not work,arbitrators generally will respect counsels’ agree-ment on the subject and allow the depositions tobe taken, after warning them of the effect on thetime and cost of the arbitration.

When One Side Does Not Want DepositionsWhat if one side wants depositions and other

discovery and the other side objects? In that situ-ation, there is a discovery dispute on which thearbitrator must rule. The arbitrator will generallydecide based on what he or she thinks is fair, con-

4 A U G U S T / O C T O B E R 2 0 0 8

In large cases involvingmultiple issues,arbitrators willgenerally recog-nize the need formore discovery.

sidering the need for an expeditious and econom-ical process.

Some arbitrators will decide discovery disputesbased on the parties’ briefs. Others will hold aconference with the attorneys for both sides afterthe briefs are submitted, at which point the arbi-trator will have a serious talk with counsel as theygo through each disputed item one by one. Ithink this approach yields more enlightened rul-ings. Often, it is only necessary for the arbitratorto go through a few disputed items or types ofitems to establish guidelines, whereupon theattorneys work out the rest. Notwithstandingpositions taken in party briefs, the attorneys tendto move towards consensus when the arbitratorsuggests restraint on both sides in the service offiguring out what discovery would provide therequesting party with information it reasonablyneeds while protecting the objecting party’sinterests. When a sensible accommodation ofeach side’s rights and interests is reached, thearbitrator will incorporate it in a ruling.

Where no consensus is reached, the arbitratorwill have to go it alone, deciding the disputebased on the goals of arbitration and the interestsand needs of both sides. The ruling will oftenbear a striking resemblance to the approaches thearbitrator suggested in the conference with theparties on the discovery dispute.

AAA RulesDecision making by arbitrators on discovery

questions is not typically based on rules. This isbecause most arbitration rules give wide discre-tion to the arbitrator to determine the scope ofdiscovery. Attorneys rarely argue for or againstdiscovery based on an institution’s arbitrationrules. Yet it is interesting to see that the “expedi-tious/economical/fair” mantra that arbitratorsgenerally use to decide discovery disputes reflectsprinciples in the arbitration rules of leading arbi-tration organizations.

The AAA Commercial Arbitration Rules focuson information exchanges.2 Rule 21(a) providesthat the arbitrator, “consistent with the expeditednature of arbitration,” may direct “the produc-tion of documents and other information.” (Em-phasis added) Rule 21(c) provides that the arbi-trator “is authorized to resolve any disputes con-cerning the exchange of information.” Thus, thisrule places discovery issues in the discretion ofthe arbitrator, subject to the need for an expedi-tious proceeding.

The AAA Procedures for Large, ComplexCommercial Disputes (which are included in theAAA Commercial Arbitration Rules) recognizethe goals of having “a just, speedy and cost-effec-

tive resolution.” Rule L-4(a) provides that “[a]r-bitrator(s) shall take such steps as they may deemnecessary or desirable to avoid delay and toachieve a just, speedy and cost-effective resolu-tion....” These rules also recognize the discretionof arbitrators in discovery matters. Rule L-4(c)provides: “The parties may conduct such discov-ery as may be agreed to by all the parties provid-ed, however, that the arbitrator(s) may place suchlimitations on the conduct of such discovery asthe arbitrator(s) shall deem appropriate.” Therule contemplates that if the parties cannot agreeon discovery, “the arbitrator(s), consistent withthe expedited nature of arbitration, may establishthe extent of the discovery.”3 Interestingly, RuleL-4(c) gives the arbitrator the discretion, in theinterests of an expedited process, to override eventhe parties’ agreement as to discovery.

Rule L-4(d) also explicitly addresses the issueof depositions and interrogatories. They may bepermitted “in the discretion of the arbitration(s)and upon good cause shown …consistent withthe expedited nature of arbitration” if the personto whom they are addressed has information“determined by the arbitrator to be necessary todetermination of the matter.”

Finally, Rule L-4(g) authorizes the arbitratorto resolve any discovery disputes.

The AAA’s Employment Arbitration Rules usedifferent language but are the same in principle.Rule 9 authorizes the arbitrator to order “discov-ery, by way of deposition, interrogatory, docu-ment production or otherwise” if the arbitrator“considers it necessary to a full and fair explo-ration of the issues in dispute, consistent with theexpedited nature of arbitration.”4

Other Providers and the RUAARule 17 of the JAMS Arbitration Rules is com-

parable to the AAA Rules, except that it contem-plates one deposition per side, while leaving addi-tional depositions to the discretion of the arbitra-tor based on “the reasonable need” for the infor-mation, the availability of other discoveryoptions, and the burdensomeness of therequest.”5

Rule 11 of the Rules for Non-AdministeredArbitration promulgated by the InternationalInstitute for Conflict Prevention and Resol-ution’s provides that arbitrators may permit suchdiscovery as they deem appropriate, “taking intoaccount the needs of the parties and the de-sirability of making discovery expeditious andcost-effective.”6

The RUAA’s7 discovery provisions are similarto the provider rules above. The arbitrator’s au-thority as to discovery is in Section 17(c). It pro-



vides: “An arbitrator may permit such discoveryas the arbitrator decides is appropriate in the cir-cumstances, taking into account the needs of theparties to the arbitration proceeding and otheraffected persons and the desirability of makingthe proceeding fair, expeditious, and cost effec-tive.” This provision covers discovery deposi-tions.

Comment 3 to Section 17 states in the firstparagraph that the approach to discovery in sub-section (c) “follows the majority approach” underthe case law involving the Federal Arbitration Act(FAA) and the 1955 Uniform Arbitration Act,which is that “unless the contract specifies to thecontrary, discretion rests with the arbitratorswhether to allow discovery.” The second para-graph notes that, although Section 17(c) allowsan arbitrator to permit discovery so that the par-ties can obtain necessary information, “the intentof the language is to limit that discovery by con-siderations of fairness, efficiency, and cost.”

Depositions for purposes of the hearing areaddressed in Section 17(b). This section states: “Inorder to make the proceedings fair, expeditious,and cost effective, upon request of a party to or awitness in an arbitration proceeding, an arbitratormay permit a deposition of any witness to be takenfor use as evidence at the hearing, including a wit-ness who cannot be subpoenaed for or is unable toattend a hearing.” This provision goes on to saythat “[t]he arbitrator shall determine the conditionsunder which the deposition is taken.”

Non-Party WitnessesThe above focuses on party discovery. Comp-

lex and largely unsettled issues arise when infor-

mation is needed from non-party witnesses whoare beyond subpoena-range of the site of thearbitration.8 These issues include the extent towhich, under the FAA9 and other laws, a non-party witness may be compelled to produce docu-ments or give testimony at a deposition or in aformal “hearing session” where he or she is locat-ed, and the related question of whether the arbi-trators (or one member of a panel) may presideover the taking of this witness’s testimony at thatlocale. These issues are beyond the scope of thisarticle. However, it is worth noting again thatnon-party witnesses who are outside the jurisdic-tion of an arbitrator's subpoena are frequentlywilling to testify by teleconference or telephoneconference at a time convenient to them inresponse to an informally transmitted subpoena,even though they could challenge the subpoenain court, or even ignore it and await enforcementproceedings. Some witnesses agree because of thepotential time and expense of contesting the sub-poena. Others do so out of a spirit of cooperationor respect for the arbitration process.

ConclusionThe principles for resolving discovery-related

issues in arbitration are clear, sensible and work-able. The vast majority of party discovery dis-putes in commercial cases are worked out amongcounsel. When counsel cannot agree, arbitratorswill rule on the discovery issues by balancing thearbitration objectives of providing an expeditiousand economical yet fair proceeding. Parties mayprovide for more expanded discovery in theirarbitration agreements or they may subsequentlyagree to such discovery before the hearing. n

1 The subject of electronic dis-covery is beyond the scope of thisarticle. Parties in arbitrations areoften willing to limit electronic dis-covery in the interests of having anexpeditious and economical pro-ceeding, although there will increas-ingly be cases where it will be im-portant. See, e.g., Irene C. Warshau-er, “Electronic Discovery in Arbitra-tion: Privilege Issues and Spoliationof Evidence,” 61(4) Disp. Res. J.(Nov. 2006/Jan. 2007).

2 The AAA rules are available atwww.adr.org.

3 The extent of an arbitrator’s

power to order sanctions against par-ties for discovery abuse is addressedin Philip D. O’Neill, “The Power ofArbitrators to Award Monetary Sanc-tions for Discovery Abuse,” 60(3)Disp. Resol. J. (Nov. 2005/Jan. 2006);Philip D. O’Neill, “Update: Mass.Allows Arbitrators to Award $$Sanctions to Remedy DiscoveryAbuse,” 60(2) Disp. Resol. J. (May-July2006).

Section 17(d) of the RUAA pro-vides, that the arbitrator may “takeaction against a noncomplying partyto the extent a court could if the con-troversy were the subject of a civil ac-

tion in this state.” The RUAA isavailable at www.nccusl.org.

4 The AAA Employment Arbitra-tion Rules are available at www.adr.org.

5 JAMS Comprehensive Arbitra-tion Rules and Procedures are avail-able at www. jamsadr.com.

6 CPR’s rules are available atwww.cpradr.org.

7 See n. 5.8 See, e.g., Leslie Trager, “The

Use of Subpoenas in Arbitration,”62(4) Disp. Resol. J. (Nov. 2007/ Jan.2008).

9 9 U.S.C. § 7.

6 A U G U S T / O C T O B E R 2 0 0 8

ENDNOTES

1D I S P U T E R E S O L U T I O N J O U R N A L


This articleaddresses abasic arbi-

tration practiceques t ion—Whatrole do dispositivemotions have inarbitration? For purposes of this article, dispositivemotions are motions that would be considered dispositiveby a court, such as a motion for summary judgment, amotion to dismiss for failure to state a claim, a motion forjudgment on the pleadings, and a motion to strike particu-lar claims or defenses. In arbitration, these motions areconsidered under the general rubric of “summary disposi-tions” or “partial summary dispositions.”

BY ALFRED G. FERRIS AND W. LEE BIDDLE

Alfred G. Ferris is a full-time neutral and a commercial, con-struction and employment arbitrator and mediator. He serveson the American Arbitration Association’s Large, ComplexCase Panel. He is of counsel with the San Diego law firm ofFerris & Britton APC, of which he was a founding partner.

W. Lee Biddle is an associate with the firm, practicing in thearea of business litigation.

Because a motion for summary disposition could be an efficientway to bring an arbitration proceeding to an end, arbitrators, par-ties and practitioners should learn when such a motion could bemade and heard.

THE USE OF DISPOSITIVEMOTIONS INARBITRATION

2 A U G U S T / O C T O B E R 2 0 0 7

Dispositive motions in litigation frequentlyprovide the most efficient means of limiting thescope of the litigation or even ending it, savingthe client’s and the court’s resources and reducingor eliminating the risk of an adverse judgment.The same considerations could apply in arbitra-tion. The reason is that not every claim or defensebrought in arbitration is sufficient to require ahearing on the merits. A claim made in arbitrationcould be just as ripe for disposition without a fullevidentiary hearing as a claim brought in civilcourt. Thus, in some situations, it could be appro-priate for a party to make, and the arbitrator tohear, a dispositive motion. Under these circum-stances, hearing such a motion may facilitate thearbitrator’s discharge of the duty that he or she“shall conduct the proceedings with a view toexpediting the resolution of the dispute.”1

However, there is little reason to bring a dis-positive motion in arbitration if resources saved byavoiding a hearing on the merits will have to be

used before a court to defend an arbitral rulinggranting the motion. So, this article first discussesthe legal framework surrounding dispositive mo-tions, including how courts view such motions andwhat the law and institutional arbitration rules sayabout them.

Next, the article discusses how the differencesbetween civil courts and arbitration could have animpact on the decision to bring a dispositivemotion and what kind of motion might be appro-priate.

Statutory AuthorityTwo issues are central to a party contemplat-

ing a dispositive motion: First, whether the arbi-trator has authority to grant such a motion andsecond, how a court would assess the motion onjudicial review. Let’s look at each in turn.

The Federal Arbitration Act (FAA), which wasenacted in 1925, is silent on the issue of disposi-tive motions, as it is on all issues of arbitrationmanagement. So is the 1955 Uniform ArbitrationAct (UAA), which was enacted in 49 states. TheUAA seemed to require the arbitrator to deter-mine all claims in an evidentiary hearing. Article

5 states that “the arbitrators shall appoint a timeand place for the hearing” and that “[t]he partiesare entitled to be heard, to present evidence ma-terial to the controversy and to cross-examinewitnesses appearing at the hearing.” What wasmeant by a “hearing” and the method of presen-tation of “evidence” left a vast area for arbitraldiscretion, subject to limited judicial review.

The language in the UAA led some commen-tators to believe that dispositive motions werenot permitted in arbitration.2 But as a few courtshad occasion to review the propriety of a disposi-tive motion while considering a petition to vacatean award, it became increasingly clear that arbi-trators had such authority. It also became obviousthat it might be appropriate for arbitration law tomake a more explicit statement about the powerof the arbitrator to manage this aspect of the ar-bitration process.

This issue was addressed in 2000, when theNational Conference of Commissioners on Uni-

form State Laws released the Revised UniformArbitration Act (RUAA).3 One of the most signifi-cant changes in this extensive revision was the addi-tion of a provision making it clear that an arbitratorhas broad powers to manage the arbitration pro-ceedings and the specific power to summarily dis-pose of claims. RUAA § 15 reads in relevant part:

(a) An arbitrator may conduct an arbitration insuch manner as the arbitrator considers appro-priate for a fair and expeditious disposition ofthe proceeding....(b) An arbitrator may decide a request forsummary disposition of a claim or particularissue:

(1) if all interested parties agree; or(2) upon request of one party to the arbi-tration proceeding if that party gives noticeto all other parties to the proceeding, andthe other parties have a reasonable oppor-tunity to respond.

Subsection 2(b) calls for minimum due process byrequiring “notice” and a “reasonable opportuni-ty” to be heard.

At this point in time, the RUAA has been en-


One of the most significant changes in the extensive revision of the Uniform Arbitration Act was the addition

of a provision making it clear that arbitrators have broad power to manage arbitration proceedings and the specific power to summarily dispose of claims.

3

acted (in some states with modifications) in 12states. Some version of the 1955 UAA still gov-erns in 37 states.

One of these states, California, now has aunique arbitration statute. Although originallybased on the 1955 UAA, it has been altered overthe years by a legislature that has taken an activerole in managing the arbitration process.4 TheCalifornia Arbitration Act (CAA) governs arbitra-tions that take place in the state where the partieshave not otherwise agreed to the applicable arbi-tration rules.

Because California is such an influential juris-diction, it is worth looking at the provisions of theCAA. Not surprisingly, since it was founded onthe UAA, it is silent on the issue of dispositivemotions, neither authorizing nor forbidding them.

However, several newer sections addressingthe management of the arbitration hearing couldbe perceived by imaginative counsel as support-ing an argument limiting the arbitrator’s abilityto dispose of claims short of full hearing on themerits.5 But this is only a potential argument. Asdiscussed below, California case law makes clearthat arbitrators have broad discretion in manag-ing the arbitration process and that this includesthe authority to grant a dispositive motion inappropriate cases.6

Nevertheless, the small uncertainty caused bythe silence of the CAA on the issue has led somecommentators to recommend that the Californialegislature adopt RUAA § 15, since it closelytracks California judicial decisions on the powersof arbitrators.7 To date, however, this has not beendone, leaving at least the potential for an argumentthat the CAA does not permit dispositive motions.

Institutional Arbitration RulesSince almost all commercial arbitration agree-

ments contractually mandate the use of arbitra-tion rules crafted by institutional providers, suchas the American Arbitration Association (AAA)and others, it is appropriate to look specifically atsuch rules.

American Arbitration Association Rules. In 1996,Michael Hoellering, then general counsel at theAAA, the largest not-for-profit arbitration pro-vider in the United States, wrote in an articleabout dispositive motions that, although the AAArules did not then address the arbitrator’s author-ity to hear and decide dispositive motions, therules did not prohibit them and “in actual prac-tice,” arbitrators have been exercising this au-thority.8

Since that time the AAA has amended its arbi-tration rules and some specifically address dispos-itive motions. For example, the current AAA

employment arbitration rules, which came intoeffect on July 1, 2006, make it clear that the arbi-trator does have authority to hear and grant dis-positive motions. Rule 27 places the onus on thearbitrator to determine if filing such a motion isappropriate in the first place. Thus, it does notseem to allow a party the unilateral right to filesuch a motion. Rather, permission of the arbitra-tor seems to be required. Rule 27 provides: “Thearbitrator may allow the filing of a dispositivemotion if the arbitrator determines that the mov-ing party has shown substantial cause that themotion is likely to succeed and dispose of or nar-row the issues in the case.”

The AAA’s Construction Industry ArbitrationRules also address the issue of dispositive mo-tions. Rule 31(b) expressly directs the arbitratorto hear motions that “dispose of all or part of aclaim.” Unlike the employment rules, this ruleseems to allow such motions to be brought at thediscretion of any party. It provides:

The arbitrator, exercising his or her discretion,shall conduct the proceedings with a view toexpediting the resolution of the dispute … anddirect the parties to focus their presentationson issues the decision of which could disposeof all or part of the case. The arbitrator shallentertain motions, including motions that dis-pose of all or part of a claim, or that may expe-dite the proceedings….Somewhat surprisingly, the AAA Commercial

Arbitration Rules are silent on the issue of disposi-tive motions. However, one could argue that theyare implicitly authorized by Rules 30 and 31,which obligate arbitrators to “conduct the pro-ceedings with a view to expediting the resolutionof the dispute” and give arbitrators the authorityto focus the presentation of evidence on issuesthat, in the discretion of the arbitrator, may readilydecide the case. Rule 31 provides, in relevant part:

The parties may offer such evidence as is rele-vant and material to the dispute and shall pro-duce such evidence as the arbitrator may deemnecessary to an understanding and determina-tion of the dispute.… The arbitrator shalldetermine the admissibility, relevance, andmateriality of the evidence offered and mayexclude evidence deemed by the arbitrator tobe cumulative or irrelevant.Rule 20(b) of the commercial rules also sup-

ports the arbitrator’s authority to hear and ruleon dispositive motions because it encourages theparties to raise any potentially dispositive issuesearly in the proceeding. This rule provides:“During the preliminary hearing, the parties andthe arbitrator should discuss the future conduct

D I S P U T E R E S O L U T I O N J O U R N A L

4 A U G U S T / O C T O B E R 2 0 0 7

of the case, including clarification of the issuesand claims, a schedule for the hearings and anyother preliminary matters.”

Like the commercial rules, the AAA/ICDR(International Centre for Dispute Resolution)International Rules do not address dispositivemotions directly. Rather Article 16 seems toauthorize them indirectly, givingthe arbitrators broad authority tomanage the arbitration. Forexample, subsection (1) providesthat “the tribunal may conductthe arbitration in whatever man-ner it considers appropriate, pro-vided that the parties are treatedwith equality and that each partyhas the right to be heard and isgiven a fair opportunity to pre-sent its case.” Subsection (2) saysthat “[t]he tribunal, exercising itsdiscretion, shall conduct the pro-ceedings with a view to expedit-ing the resolution of the dispute.”Subsection (3) further providesthat the tribunal may in its dis-cretion “direct the parties tofocus their presentations onissues the decision of which coulddispose of all or part of the case.”

CPR Institute Rules. The CPRInstitute’s Rules for Non-Ad-ministered Arbitration are, atbest, ambiguous on the issue ofdispositive motions. But thecommentary to Rule 9 suggeststhat arbitrators have authority todecide pure legal issues prior to the hearing onissues that involve undisputed issues of fact. Thecommentary states: “Some controversies hingeon one or two key issues of law which in litiga-tion may be decided by motion for partial sum-mary judgment. At the pre-hearing conference,the desirability of the Tribunal’s ruling on suchissues before the hearings commence can be con-sidered.” This is the only statement in the rulesthat could be germane to dispositive motions.

JAMS Rules. The JAMS Comprehensive Ar-bitration Rules clearly say that arbitrators have au-thority to rule on summary adjudication motions.Rule 18(a) of these rules provides: “The Arbitratorshall decide a Motion for Summary Disposition ofa particular claim or issue, either by agreement ofall interested Parties or at the request of one Party,provided other interested Parties have reasonablenotice to respond to the request.”

JAMS’s International Rules are like the ICDRinternational rules quoted above. They do not

directly authorize dispositive motions. But Rule20.1 does so indirectly by giving arbitratorsauthority to “conduct the arbitration in whatevermanner it considers appropriate, provided that theparties are treated with equality and that eachparty has the right to be heard and is given a rea-sonable opportunity to present its case.” This rule

also provides that the tribunal,“exercising its discretion, willconduct the proceedings with aview to expediting the resolutionof the dispute.” Similar to theICDR international rules, Rule20.3 of the JAMS internationalrules authorizes arbitrators to“direct the parties to focus theirpresentations on issues the deci-sion of which could dispose of allor part of the case.”

Standard of Judicial ReviewStatutory and case law in most

jurisdictions make clear that ar-bitration decisions can be chal-lenged only on very narrowgrounds. The grounds on whichan award may be challenged arecontained in Article 10 of theFAA or in similar state arbitra-tion laws. Two grounds arepotentially relevant to the sub-ject of dispositive motions. Oneis that the arbitrator refused tohear material evidence, prejudic-ing the rights of the parties. Theother is that the arbitrator

exceeded his powers.9It is widely recognized that arbitral awards are

entitled to great deference and that parties whohave agreed to arbitrate are not entitled to a sec-ond bite of the apple in court. For example, inMoncharsh v. Heily & Blase, the California SupremeCourt made it clear that a reviewing court is “notfree to review the merits of the controversy, thearbitrators’ reasoning, or the sufficiency of the evi-dence on which the award is based.”10 Indeed, areviewing court cannot “examine the arbitrationaward for errors of fact or law” and “an error oflaw apparent on the face of the award that causessubstantial injustice does not provide grounds forjudicial review.”11 Other courts have noted thatthe “standard of review of arbitral awards is amongthe narrowest known to law.”12

Judicial ReviewThis raises the issue of how courts have re-

viewed arbitral awards that make a summary dis-


The cases makeclear that in theappropriate cir-cumstances anarbitrator doesnot need to hearlive testimony inthe context of afull evidentiary

hearing and thatthe parties do

not have an auto-matic right tocross-examine

witnesses.


position of the case. The fact is that case lawdealing with dispositive motions is not extensive.What the case law teaches is that courts have notbeen receptive to arguments that granting a dis-positive motion, by itself, constitutes an arbitra-tor error that would warrant a judicial decision tovacate an arbitration award for refusing to hearmaterial evidence or exceeding arbitral powers.

These cases also show that, when the rulesadopted by the parties fail to expressly providefor dispositive motions, the argument could bemade that the arbitrator exceeded his or her pow-ers in granting such a motion. Although this is anargument based largely on an unwarranted as-sumption, the lack of clarity in the rules may leadarbitrators to hesitate to hear and grant such mo-tions. It could also lead parties to hesitate tobring them, even where warranted by the lack ofany disputed material issue of fact. Fortunately,as rules are being altered or amended, the cleartrend is to add language making explicit the arbi-trator’s power to hear dispositive motions.

The cases make clear that in the appropriatecircumstances an arbitrator does not need to hearlive testimony in a full evidentiary hearing andthat the parties do not have an automatic right tocross-examine witnesses. What matters is that thearbitrator gives each side an opportunity to ad-dress the relevant issues before ruling on a dis-positive motion.

The 10th Circuit has said that “a fundamental-ly fair [arbitration] hearing requires only notice,opportunity to be heard and to present relevantand material evidence and argument before thedecision makers.”13 Evidence that is relevant andmaterial need not be presented live. It could beoffered through a declaration, affidavit or deposi-tion transcript.

The leading case addressing the issues in-volved in dispositive motions is Schlessinger v.Rosenfeld, Meyer & Susman, decided in 1995 bythe California Court of Appeal.14 In Schlessingerthe court found that the arbitrator acted properlyin rendering a final award without any hearings“on the merits,” although dispositive motionswere not specifically authorized by the parties’arbitration agreement, the AAA CommercialArbitration Rules, or the CAA.

The Schlessinger arbitration was brought by adeparting law partner who challenged a partner-ship agreement provision that limited his payoutif he competed with the former firm. The arbi-trator apparently viewed this claim as presentinga straightforward question of law: Was this con-tact clause lawful? The arbitrator entered a finalaward for the respondent law firm after decidingtwo summary adjudication motions. First, he

ruled that the anti-competition clause was lawful,if reasonably limited in time, scope and location;second, he concluded that the specific limit onthe partner’s payout was reasonable.

Prior to ruling on the summary adjudicationmotions, extensive document discovery anddepositions took place because the parties’ agree-ment provided that California Code of Civil Pro-cedure § 1283.05 applied. This section authorizesdepositions and discovery regarding the subjectmatter of the arbitration. It also gives the partiesthe same rights, remedies and procedures, andthe same duties, liabilities and obligations in arbi-tration that they would have if the case werepending in court.

With the aid of depositions and discovery,both sides obtained written evidence, which theysubmitted along with their motions. The arbitra-tor conducted motion hearings by telephone,However, there was no in-person hearing withlive witness testimony.

Schlessinger challenged the final ruling, citingCivil Procedure Code § 1286.2(a)(5), which pro-vides that an arbitration award must be vacated ifthe rights of a party were substantially prejudicedby the arbitrator’s “refusal … to hear evidencematerial to the controversy.” Schlessinger con-tended that the arbitrator did not “hear” any evi-dence because he disposed of the principle issuesby way of summary adjudication motions insteadof receiving live testimony and other evidence ina formal hearing on the merits. Schlessinger fur-ther argued that the lack of a hearing on the mer-its prevented him from exercising his fundamen-tal right to cross-examine witnesses.

The court ruled that the absence of explicitauthorization of dispositive motions in Californialaw or the chosen arbitration rules did not meanthe arbitrator lacked power to dispose of a claimwithout an evidentiary hearing on the merits. Thecourt said that the nature of the arbitration processand the arbitrator’s inherent power to determinethe issues material to a controversy empoweredthe arbitrator to rule by dispositive motion:

We decline to read section 1286.2(e) as requir-ing that an arbitrator always resolve disputesthrough the oral presentation of evidence orthe taking of live testimony. To do otherwisewould lead to anomalous results. The purposeof arbitration, as reflected in the [CaliforniaArbitration] Act, is to provide a “speedy andrelatively inexpensive means of dispute resolu-tion.” Having chosen arbitration over civil liti-gation, a party should “reap the advantages thatflow from the use of that nontechnical, summa-ry procedure.”

6 A U G U S T / O C T O B E R 2 0 0 7

The court went on to explain the philosophybehind dispositive motions:

Schlessinger’s position would require full-blown trials even where, as here, one of theparties believes that no material facts are indispute. In a case where a legal issue or defensecould possibly be resolved on undisputed facts,the purpose of the arbitration process wouldbe defeated by precluding a summary judg-ment or summary adjudication motion andinstead requiring a lengthy trial.

The holding in Schlessinger is echoed in severalcases outside California.15 These courts have alsoupheld dispositive decisions by arbitrators. Yet, asnoted by some commentators, they have expressedthe view that such motions are appropriate only

when the opposing party is given a full opportuni-ty to address the issues relevant to the motion.16

Only one case has been found in which a courtvacated an award granting a dispositive motion.In Prudential Securities v. Dalton, a federal districtcourt in Oklahoma vacated the award granting amotion to dismiss because the panel, prior togranting the motion, did not hear a broker’s mo-tion to compel the production of documents hecontended were necessary to prove the claim.The court felt that the broker was not given theopportunity to present “factual evidence at ahearing relative to the factual issues presented byhis claim.”17

It is not clear that the Prudential case stands foranything other than as a caution to arbitrators tobe sure, when considering a dispositive motion,that the responding party has the maximum op-portunity to provide the arbitrator with both legalpoints and authorities and relevant facts, either byaffidavit, declaration under penalty of perjury, orsigned deposition transcript.

Also, since Prudential dealt with a motion to dis-miss for failure to state a claim rather than a sum-mary judgment motion, the panel should haveassumed for purposes of the motion that all allega-tions of the claim were true. It is not clear if thepanel did so.

The case law suggests that courts will not dis-turb an award that grants a dispositive motionwithout a hearing on the merits where the arbi-

trator took steps to ensure that the due processrights of the parties were protected through ade-quate notice and an opportunity to address thedispositive issues.

Types of Dispositive MotionsDispositive motions in civil actions may have

different names in different courts and in differ-ent states. Generally, they fall into two broad cat-egories.

The first type include motions that attack thepleadings, for example a motion to dismiss, tostrike a claim or defense, or for a judgment on thepleadings. These motions generally do not requirecounsel to discover and analyze evidence becausethey focus on what the pleadings say to determineif the elements of a valid claim have been stated.

The second type of dispositive motion seeks asummary adjudication of the dispute. These mo-tions cannot be made unless there is undisputedevidence showing that there is no genuine issueof material fact and that the moving party is enti-tled to a judgment as a matter of law.”18

Each type of motion will be discussed in thecontext of arbitration:

Motions Attacking the Pleadings. These motionsare common in civil court, particularly in “codepleading” states such as California. There, apleading is ripe for attack if it fails to identifyfacts supporting each element of each cause ofaction.19

However, motions attacking the pleadingswould seem to have limited utility in arbitrationproceedings. The primary reason is that thepleading requirements in arbitration are extreme-ly relaxed.20 For example, to start an employmentarbitration under the AAA rules, the claimantneed only file “a brief statement of the nature ofthe dispute”; the amount in controversy, if any;the remedy sought; and the requested hearinglocation.21 Compare this to the notice pleadingrequirements for actions in federal court, whichrequire “a short and plain statement of the claimshowing that the pleader is entitled to relief.”22

However, this does not mean that an arbitratorshould not agree to hear and decide a motion ona pleading in an appropriate case. How should anarbitrator go about deciding such a motion?


The court said that the nature of the arbitration process and the arbitrator’s inherent power to determine

the issues material to a controversy empowered the arbitrator to rule by dispositive motion.


When a trial court decides a motion on thepleadings, it assumes the facts stated in the plead-ing are true and then determines if the facts al-leged state a valid claim.23 An arbitrator whohears a dispositive motion attacking a pleadingshould do the same: assume the facts stated in thechallenged pleading are true. If the arbitratorruled in favor of the moving party without doingso, the award would be vulnerable to being over-turned on the ground that the author of the chal-lenged pleading did not have an opportunity topresent relevant evidence. This is apparentlywhat happened in the Prudential case. The courtstated in that case:

Before an arbitration panel should be able todismiss a claim for failure to state a claim uponwhich relief can be granted, the claim shouldbe facially deficient. Such is not the case herefor if the allegations of the claimant’s com-plaint are taken to be true, he would be enti-tled to some form of relief.… Thus, to assurefundamental fairness, claimant is entitled tooffer evidence relevant to his claim.24

It is clear from this statement that the courtassumed an arbitrator could grant a motion onthe pleadings, provided that in deciding the issuethe arbitrator assumed the facts pled to be trueand found that they were insufficient to state avalid claim or defense.

We also need to consider one more factor.Civil courts typically allow plaintiffs leave toamend a deficient complaint at least once.25

Thus, if a defendant moved to dismiss a com-plaint for failure to state a claim, the court proba-bly would dismiss without prejudice and grantleave to replead with greater particularity.

An arbitrator should follow this practice. Thearbitrator should not conclude an arbitration bygranting a motion on a pleading without leave toamend except when the pleading in question hasa flaw that cannot be remedied. An example of anon-remediable flaw is a pleading clearly filedbeyond the applicable statute of limitations orone with an obvious jurisdictional defect.

Even then, to avoid a possible later attack onthe award, it might be advisable for both theparty attacking a pleading and the arbitrator toallow the author of the pleading in question toproduce extrinsic evidence by declaration ordeposition that might be relevant to the issuesraised by the motion.

Motions for Summary Adjudication. As previous-ly noted, motions for summary adjudication (alsoknown as summary judgment) are appropriateonly when no disputed material fact is at issueand the only question is one of law.

Summary judgment motions filed in court usu-ally must comply with the applicable rules of civilprocedure.26 That is not the case in arbitrationbecause arbitrators are not bound by court rulesof procedure or evidence unless the parties soagree.27

As the institutional arbitration rules quotedabove show, arbitrators are generally required tomanage the proceedings with a view to efficientlyresolving the case. Where the arbitration rulesexpressly or implicitly allow for dispositive mo-tions, that would include hearing a motion forsummary disposition. To reduce the risk of laterchallenge, it might be prudent for the arbitratorto encourage both parties to expressly buy intothe procedural approach that the arbitrator in-tends to take to the dispositive motion, includingnotice and other procedural requirements.

Although arbitration is more flexible than liti-gation and not as formal, the procedures usedmust be fair. In other words they must satisfyarbitral due process. In the case of a dispositivesummary judgment motion, this means that theparty opposing the motion must have an oppor-tunity to present, not only legal arguments, butrelevant evidence to establish that there are mate-rial issues of fact in dispute, despite the movingparty’s claims to the contrary.28 How and in whatform that evidence is presented and receivedappears to be within the arbitrator’s discretion.

Discovery and Dispositive MotionsA key issue the arbitrator will have to decide is

how much and what type of discovery to allowbefore hearing a summary adjudication motion.Absent an agreement by the parties, discovery inarbitration is usually quite limited compared tocivil litigation. Arbitrators normally have discretionto determine how much discovery will be allowed,since most arbitral rules do not prescribe a specifictype or amount. A party opposing a summary adju-dication motion is likely to believe that extensivediscovery is needed in order to develop supportingevidence.

The case law does not provide much guidanceon how much discovery should be allowed. How-ever, denying all discovery on an issue relevant tothe judgment may be viewed as fundamentallyunfair.

In the Schlessinger case, the arbitrator allowedextensive discovery by agreement of the parties.Thus, the reviewing court easily found thatSchlessinger, who challenged the summary judg-ment procedure, had an adequate opportunity togather and present evidence.

If there is no agreement among the parties ondiscovery relating to a summary adjudication

8 A U G U S T / O C T O B E R 2 0 0 7

motion, should the arbitrator condition hearingthe motion on the moving party agreeing to anappropriate amount of discovery? How much dis-covery is appropriate? Should the arbitrator allowthe same amount of discovery that a court wouldhave allowed if the action had been broughtthere? Should the arbitrator limit discovery tothe issues he or she considers material to themotion? These are questions of judgment. Theanswers will depend on the nature of the case, thespecific issues raised by the motion, and the costsassociated with the motion and discovery. Theyalso will depend on the arbitrator’s view of his orher inherent power to manage the proceedings,including how much discovery is permitted bythe rules or the parties’ agreement.

ConclusionDispositive motions have the potential to play

an important role in resolving disputes in arbitra-tion more quickly and efficiently. They may ben-

efit both parties by avoiding an unduly prolongedarbitration and they may assist the arbitrator inexpeditiously resolving the dispute.

The relaxed procedural rules of arbitrationproceedings allow the parties and the arbitratorto be more flexible in designing the proceduresthat will apply to dispositive motions. Whateverprocedures are adopted, the party opposing themotion must be given adequate notice and ameaningful opportunity to respond.28 Moreover,in the case of a summary adjudication motion,the arbitrator must give serious consideration towhether fairness requires granting the parties theopportunity to conduct discovery. If so, the arbi-trator would then have to determine how muchdiscovery would be reasonable. If the arbitratorbelieves that discovery could significantly raisethe cost of the motion above what it might costto proceed to a hearing on the merits, the arbi-trator has sufficient discretion to deny the dispos-itive motion. n


1 AAA Commercial ArbitrationRules, Rule R. 30.

2 See Schlessinger v. Rosenfeld, Meyer& Susman 40 Cal. App. 4th 1096, 1108(1995), citing comments in a law reviewarticle and in the Rutter California Prac-tice Guide stating that motion practicemight not be available in arbitration.The Schlessinger court rejected thisauthority and determined that suchmotions were permitted.

3 The RUAA can be viewed atwww.nccusl.org (search for UniformArbitration Act).

4 See generally, Prof. Roger Alford,“Report to Law Revision CommissionRegarding Recommendations forChanges to California Arbitration Law,”4 Pepp. Dispute Resol. L.J. 1 (2003).

5 See Cal. Code Civil Proc. § 1282.2.6 Schlessinger, supra n. 2.7 See Alford, supra n. 4.8 Michael Hoellering, “Dispositive

Motions in Arbitration,” 1(1) ADRCurrents 1, 8 (Summer 1996).

9 See FAA § 10(3) and (4) allowing anaward to be vacated “where the arbitra-tors were guilty of misconduct … inrefusing to hear evidence pertinent andmaterial to the controversy” and “wherethe arbitrators exceeded their powers.”See also § 1286.2(a)(3) and (5) of theCalif. Code of Civil Procedure, allowingan award to be vacated if “the rights ofthe party were substantially prejudicedby misconduct of a neutral arbitrator” orthere was a “refusal of the arbitrators tohear evidence material to the controversy….” The common law “manifest disre-

gard of the law” doctrine also could beasserted, since it is in some ways similar tothe argument that the arbitrator exceededhis powers.

10 Moncharsh v. Heily & Blase 3 Cal.4th1, 11 (1992).

11 Id. at 33.12 Brown v. Coleman Co., 220 F.3d

1180, 1182 (10th Cir. 2000).13 Bowles Fin. Group v. Stifel, Nicolaus

& Co., 22 F.3d 1010, 1013 (10th Cir.1994).

14 Supra n. 2, 15 See Intercarbon Bermuda, Ltd. v.

Caltex Trading & Transp. Corp., 146F.R.D. 64 (S.D.N.Y. 1993) (confirming asummary adjudication by an arbitratorbased on documentary evidence but ex-pressing reservations about deciding arbi-tration cases without an evidentiary hear-ing); Stifler v. Seymour Weiner, 488 A.2d192 (Md. Ct. App. 1985) (dispositivemotion is appropriate on issue of statuteof limitations); Pegasus Constr. Corp. v.Turner Constr. Co., 84 Wash. App. 744,929 P.2d 1200 (1997) (hearing of all evi-dence regarding merits of a claim isunnecessary where a decision can bemade on basis of motion to dismiss).

16 Timothy J. Heinz, “Revised Uni-form Arbitration Act, An Overview,” 56(2) Disp. Resol. J. 28 (July 2001).

17 929 F. Supp. 1411, 1418 (N.D.Okla. 1996).

18 F.R.C.P. 56. See also Calif. CodeCivil Proc. § 437(c): “Any party maymove for summary judgment in anyaction or proceeding if it is contendedthat the action has no merit or that there

is no defense to the action or proceeding.”19 Calif. Code Civ. Proc. § 425.10

states that complaints must include “astatement of the facts constituting thecause of action.”

20 However, under most institutionalarbitration rules, the arbitrator has ex-tensive power to require the parties toprovide more detailed claims and de-fenses.

21 AAA Employment ArbitrationRules, R. 4.

22 F.R.C.P. 10.23 See Calif. Code Civ. Proc.

§ 430.10(e), noting the grounds for de-murring to a claim are that “the plead-ing does not state facts sufficient to con-stitute a cause of action.”

24 Prudential Securities, supra n. 17, at1417-18.

25 “It is an abuse of discretion for thecourt to deny leave to amend wherethere is any reasonable possibility thatplaintiff can state a good cause of ac-tion.” Goodman v. Kennedy 18 Cal. 3d335, 349 (1976).

26 See, e.g., Calif. Code Civil Proc. §437(c), requiring 75 days’ notice forsuch hearings, and Calif. Ct. R. 3.1350,describing the format of the papers forsummary judgment or adjudicationmotions.

27 See Schlessinger, supra n. 2, at 1108:“For instance, as stated, Code of CivilProcedure section 437c, the summaryadjudication statute, did not apply to thearbitration here.”

28 Bowles Fin. Group, supra n. 13, at1013.

ENDNOTES


Easy, Efficient, Economical User FriendlyBY LOUIS L. C. CHANG

Arbitration of large, complex conflicts, oftenwith multople parties, requires good manage-ment to obtain the well-known time and cost-saving advantages of the process. This articlepresents a collection of ideas thea uthor gath-ered from experienced arbitrators, advocatesand users of arbitration that are geared topreserving those advantages and keepingarbitration informal and user-friendly.

Arbitration is used in a broadrange of circumstances andit enjoys exceptionally

strong support by American courts.A general goal of arbitration is toachieve fair and appropriate resolu-tions of disputes with efficiency and economy. Some of the most importantcharacteristics of arbitration are

• the decision maker is selected by the parties,• the proceedings and award are private,• the process is less formal than litigation,• legal rules of procedure and evidence do not apply, and• the process can be understood without formal legal training.Arbitration is a consensual process that can be customized to suit specif-

ic circumstances and relationships. Whether governed by the FederalArbitration Act, the 1955 version of the Uniform Arbitration Act, whichhas been adopted by most states, or the revised version (RUAA), whichhas been adopted by a handful of states (12 as of August 31, 2005), thereare opportunities to shape the process to the parties’ needs. Although oneparty can take advantage of the other through process design, that is notadvisable since it invites legislatures to act to impose constraints on cer-tain types of arbitration, particularly those involving parties with little orno bargaining power, such as consumers and employees.


The author is a mediator, arbitrator, and lawyer inHonolulu, Hawaii. Since 1973, he has worked pri-marily on commercial and contract matters, construc-tion, insurance and labor and employment disputes.Reflecting the growth of ADR, his practice hasincreasingly involved increased service as a mediator,arbitrator, facilitator, umpire and discovery master.Mr. Chang serves on panels of a number of ADRprovider organizations, including the AmericanArbitration Association, Dispute Prevention &Resolution, Inc., and the Federal Mediation &Conciliation Service. He also serves on the arbitrationpanel of the Hawaii Labor Relations Board and onthe mediation panel of the federal and bankruptcycourt in Hawaii. He can be reached by phone at (808)384-2468 and by e-mail at [email protected]. Hiswebsite is http://louchang.com

2 M A Y / J U L Y 2 0 0 6

Thus, supporters of arbitration should promotethe fairest possible process as well as one that isefficient, cost-effective and user-friendly. To dothis the following elements must be present.

Establish an Overall Spirit of Cooperation forthe Arbitration

Arbitrators can set the tone for the arbitrationby stating that they expect civility and coopera-tion from the parties and theirattorneys. They should empha-size the differences between liti-gation and arbitration and urgeparties to avoid importing judi-cial procedures into the arbitra-tion if they want a swift but fairprocess. Arbitration honors sub-stance over form so that partiescan obtain the process that theybargained for. If the arbitrationis overly adversarial and legalis-tic, it will probably take longerto resolve. The goal should beto keep moving forward so thatthe arbitrator can resolve all arbitrable issues in atimely, user friendly and efficient manner.

Arbitrators Should Be AccessibleArbitrators should be easily accessible to the

parties. Telephone conference calls between theparty representatives and the arbitrators shouldbe promptly and easily scheduled. Working withthe parties or their advocates, arbitrators canencourage parties to simplify administrative andscheduling matters. Parties can agree that directtelephone or email communication to the arbitra-tor’s office can be made where it is limited torequesting and coordinating an immediate orprompt conference call including all parties ortheir representatives.

Shape and Organize the Arbitration ProcessArbitrators must be flexible and willing to tai-

lor the process to fit the parties’ needs. As statedby Prof. Frank Sanders, the challenge is to worktogether to “fit the forum to the fuss.” Invite dis-cussions at preliminary conferences of ways tosimplify and streamline the arbitration processand to keep the proceeding on schedule.Arbitrators should encourage counsel to bring upall procedural and substantive issues and theirideas to accelerate the process during preliminaryconferences. This can foster a more efficient andeconomical arbitration process.

Focus on the Issues in the CaseIt is essential to define the issues for resolution

in arbitration as early as possible. During an earlypreliminary conference, the arbitrator shoulddetermine whether all claims, counterclaims anddefenses have been communicated and are clearbetween the parties. If not, the arbitrator can seta schedule for the clarification or supplementa-tion of claims, counterclaims and defenses.Frequently, a case will turn upon a few specificcrucial issues. If the critical issues can be identi-

fied during pre-arbitration con-ferences, the parties can thenfocus their discovery needs andwitness presentations based onthose critical issues. Hearingscan then be shorter, morefocused and more efficient.

Before the hearing, reviewwith the parties the facts andissues in contention so that theycan identify evidence and wit-nesses who have informationpertinent to resolving these mat-ters. Facts and issues not in con-tention can be the subject of

stipulation. Review with the parties the facts andissues in contention so that they can identify evi-dence and witnesses who have information perti-nent to resolving these matters. Facts and issuesnot in contention can be the subject of stipulation.

Identifying facts not in dispute and thoseremaining in dispute will also help the parties tofocus their preparation and presentation to thearbitrator upon what is legitimately at issue.Parties can be encouraged and asked to prepareand submit uncontested facts, by stipulation tothe extent possible. An alternative is that partiescan submit a statement of proposed uncontestedfacts that the other party can respond to. If noobjection is noted to a proposed fact, the case canproceed with the understanding that the uncon-tested facts are accepted as established for thepurposes of the case. The goal is to only spendvaluable time and resources developing and pre-senting information pertinent to matters in dis-pute to the arbitrator. In this way, the hearingcan again be limited and focused only upon thekey matters and issues in dispute.

Identify and Arrange for Needed InformationTo minimize the need for subpoenas, encourage

parties to voluntarily produce relevant documentsand employee witnesses. In some cases, partiesneed records from persons who are not a party tothe arbitration proceeding. The arbitrator hasauthority to issue document subpoenas to thirdparties for production at the hearing. See under § 7of the Federal Arbitration Act and § 17 of the


Resolving gatewayissues early cansave the partieswork and reduce the scope of (or

necessity for) fur-ther proceedings.

RUAA. There is also case law authority confirmingthe arbitrator’s authority to subpoena documentsduring the “discovery” phase of a case (i.e., prior tothe hearing). Early production of documents canhelp the parties to more accurately assess theirpositions and lead them to resolve some or allissues prior to the hearing on the merits.

Establish Communication ProtocolsEncourage the parties to agree to communicate

using the most efficient technology. Ask whethercounsel would be comfortable using e-mail com-munications in lieu of faxes, U.S. mail, or handdelivery. If so, clarify whether e-mail is to be lim-ited to administrative and scheduling matters orbe used only to transmit memoranda andmotions. Encourage the parties to limit theircommunications to the arbitrator to those mattersthat relate to the arbitrator’s role or seek respon-sive action from the arbitrator. All communica-tions sent to the arbitrator must be simultaneous-ly provided to the other parties. If e-mail is to beused in a limited way, encourage the parties andcounsel to use faxes to transmit other documents.

Dispose of Preliminary and Dispositive IssuesThe arbitrator should identify and address all

preliminary and dispositive legal issues for earlydisposition at a pre-arbitration hearing, whereappropriate. Resolving these gateway issues earlycan save the parties work and reduce the scope of(or necessity for) further proceedings.

Group and Bifurcate When AppropriateThe arbitrator can bifurcate issues for hearing

in a logical or efficient manner. For example, in aconstruction defect case, the arbitrator couldaddress causation and liability in the first phase,then the appropriate remedy and damages in asecond phase. It might also be appropriate tobifurcate issues by the parties or the contractsinvolved (i.e., claims against design professionalsor subcontractors might be more efficiently han-dled in separate hearings).

Consider Using a Neutral Fact FinderWhere there are lots of disputed and/or de-

tailed facts, the arbitrator could ask the parties ifthey want to consider jointly retaining a neutralfact finder who will investigate and determine thefacts. To make the fact finder’s findings morecredible, the person so appointed should be anappropriate expert. If a neutral fact-finder is to beused, the scope of his or her review should beclear. The fact-finder’s report and conclusionsshould be provided to the parties in advance ofany hearing. Using a neutral fact finder can

remove factual issues that would be laborious andtime-consuming to establish in an arbitrationhearing (and usually involve questioning of multi-ple witnesses), thereby saving costs and reducingthe number of issues to be decided at the hearing.It also avoids the need for each party to retain itsown expert for purposes of factual review.

Promptly Exchange Exhibits and EvidenceThe information exchange or discovery por-

tion of arbitration has been discussed by manyarbitrators. Like those arbitrators, I ask the par-ties to exchange lists of the document exhibitsthey intend to introduce at the hearing on themerits. Then, I like the parties to exchange num-bered (or lettered in combination with numbers)exhibits in tabbed binders. I like internal pages ofvoluminous documents to be numbered for easeof reference. In a case with multiple issues, theparties can group the exhibits pertinent to eachissue by assigning a different letter prefix (e.g.,Documents A-1 through A-15, B-1 through B-6,and C-1 though C-3 pertain to issues A, B, and Crespectively). This organization permits the addi-tion of related exhibits so that all issue-relatedexhibits are together and will help the arbitratorfind the pertinent evidence with relative ease.

I also ask parties to provide me with a bindercontaining joint exhibits to avoid duplication.This avoids duplicative work and helps to expe-dite things.

Make sure the parties understand that, exceptfor impeachment and rebuttal purposes, allexhibits intended to be introduced at the hearingon the merits (either in support of a claim ordefense) will be provided to the other party andthe arbitrator prior to the commencement ofhearing.

Dispense with the formality of litigation withrespect to document exhibits. Propose that theparties accept the protocol that all documentexhibits are deemed admitted unless a specificconcern or objection is raised to a particular doc-ument. At the hearing the parties can focus theirarguments upon the merits, applicability and reli-ability of any piece of evidence.

Decide on Witnesses and Means ofExpediting the Introduction of Evidence.

Try to minimize the necessity of subpoenas.Ask the parties to agree to produce the atten-dance of those witnesses within their employ orcontrol without the necessity of subpoenas. Ifsubpoenas will be needed to summon the atten-dance of witnesses at the hearing, make sure thatthe parties follow the rules of notice and service.

Arbitrators should obtain from the parties


4 M A Y / J U L Y 2 0 0 6

their anticipated order of witnesses prior to thedate they are expected to testify. This permits theother party to prepare for cross-examination ofthe identified witnesses.

Expediting the introduction of evidence mayentail persuading the parties’ attorneys to usemore informal means of providing witness testi-mony and to take advantage of new technology.

Consider witness conferencing where fact orexpert witnesses can provide testimony on com-mon topics or issues at the same time. There areadvantages to this type of evidence presentation.Some people believe that wit-nesses are more likely to betruthful when giving evidencein the presence of other wit-nesses. Moreover, one witnessmay be able to fill in a gap leftby another or supplementsomething that was said. Thearbitrator can receive all evi-dence pertinent to a specificissue at the same time.Witnesses can explain andclarify their areas of agreement and disagreement.

Another means of expediting the introductionof evidence at the hearing is through written wit-ness statements in lieu of direct testimony.Sometimes, parties are willing to have all directtestimony submitted through written witnessstatements. This can help to focus the direct tes-timony as well as shorten the hearing time. Allwritten witness statements must be provided tothe arbitrator and exchanged by the parties inadvance of the hearing. If written witness state-ments are used, they should refer to the relevantportions of the key exhibits. This is quite helpfulto the arbitrator. At the hearing, once everyonehas had an opportunity to read the witness state-ment, the witness is made available in person forcross and redirect examination.

Direct testimony also could be introduced froma deposition in the case (this would be a vital wit-ness, since depositions are not taken as liberally inarbitration as they are in a judicial proceeding) ortrial testimony in another proceeding. Parties canconsider providing written summaries, but only ifit will result in saving time.

Use Graphics to Tell a Story.A chronology of key events and key documents

can be extremely helpful to the parties in identi-fying the disputed facts and to the arbitrator inunderstanding the facts. I ask the parties to pre-pare this jointly.

An organization chart or list of the key indi-viduals referenced in the documentary exhibits,

with a brief description of their title, position androle in the dispute also can help the arbitratormore easily understand the case and the role andcapacity of the involved players.

Floor plans, diagrams and photos of the scenemay also be useful in certain kinds of cases.Sometimes a picture is indeed worth a thousandwords.

A site visit can be invaluable in constructionand other kinds of cases to acquaint the arbitratorwith the pertinent settings and issues.

In a case involving a panel of arbitrators, onearbitrator could be designatedto address issues and motionsconcerning discovery.Another could be designatedto issue subpoenas. The par-ties can agree that facsimilecopies of the arbitrator’ssigned subpoenas can be usedfor all purposes to the sameextent as the signature on anoriginal signed subpoena.

Use Expert Witness PanelsA recognized weakness of an adversary dispute

resolution system is its high cost, some of whichmay be attributable to the battle of technicalexperts. If the parties can agree on one acceptableexpert who had no involvement in the case, theycan eliminate the cost of one expert. (If they can’tagree on the expert, they can suggest names tothe arbitrator, who will make the choice.) Forexample, in a partnership accounting dispute, theparties could agree to have a mutually trustedaccountant make findings, conclusions or recom-mendations to the arbitrator. Where technicalexpertise is needed to persuade the arbitratorhow to rule, the parties could consider jointly re-taining one technical expert at their shared cost.Using a neutral expert also makes sense wherethere is a technical interpretation to be decided.The parties can thus avoid a costly “battle ofexperts” and cut their expert costs by at least half.Also, issues of credibility or bias of expert wit-nesses who are suspected of being paid advocatewitnesses is then minimized.

Whether one or more experts will testify abouta particular disputed issue or fact, establishground rules for their qualifications. Also deter-mine whether written reports will be producedand, if so, require the expert report to (1) containthe bases for the expert opinions stated in thereport, (2) reflect the theories and opinions of theexpert after all investigation and testing has beendone, and (3) be disclosed to the adversary priorto the hearing. To avoid unfair surprise, clarify


Pre-qualify expertsby having the parties

exchange theirresumes well

before the hearing.


with the parties a mutual understanding thatunless good cause is shown to the arbitrator, allexpert opinions of the experts must be includedin their report as their testimony will be limitedonly to the opinions contained and disclosed intheir reports.

If expert reports are not going to be produced,suggest having both experts’ direct testimonysubmitted in writing and exchanged in advance ofthe hearing. As in the case of ordinary witnesses,the experts will be available in person for cross-examination.

Pre-qualify experts by having the parties ex-change the experts’ resumes well before the hear-ing. If there are no objections, the parties can beasked to stipulate that their respective expertsmay testify as experts in the relevant field. Ifneeded, the parties can utilize a formal voir direprocess to examine their expert qualifications.This can be done by telephone conference inadvance of the hearing. If done in person, it caninvolve considerable travel expense, especiallywhen there are multiple experts involved.Resolving the expert qualifications issue beforethe hearing is necessary so that the hearing itselfis used only to deal with the disputed issues in thecase.

If multiple experts will be testifying on thesame issue, consider having them all testify at thesame time. This works as follows (assuming thatprior to the hearing, their resumes wereexchanged and provided to the arbitrator and theparties did not object to their testifying, and theirwritten reports were also exchanged in advance ofthe hearing):

The expert witnesses are sworn in together.The arbitrator questions the experts first. This ismore productive than having the attorneys ques-tion them first because the arbitrator will askwhat he or she wants to know. This way the par-ties’ advocates won’t have to guess what the arbi-trator is thinking or what issues are on the arbi-trator’s mind.

After the arbitrator finishes questioning all theexperts, the parties’ attorneys ask their questions,brining out information they believes is desirableand necessary for the arbitrator to resolve the dis-pute. In addition, the experts can be invited to askquestions of each other and provide additionalinformation they believe to be helpful or pertinent.

The principal advantage of the expert panelformat is that the opinions of all of the expertscan be expressed at one time, one issue at a time.Moreover, the experts have the opportunity tooffer information, not only respond to questions.

Many times there is a consensus among theexperts on significant areas. These can be identi-

fied and noted. The inquiry can then move on toareas or issues where the experts disagree.

In the panel format, experts can respondimmediately to each other’s opinions. Opinionscan be tested and clarified. The arbitrator gainsthe benefit of the expertise of all the experts asthey clarify the issues.

Arbitrators should have a chart of questionsand issues prepared beforehand on which to cap-ture the experts’ opinions and rationales, andidentify the areas of contention. The panel ques-tioning can be divided into phases based on theissues to be addressed: for example, causation, lia-bility, damages.

The expert panel is a useful way of collectingthe testimony of multiple witnesses on a singlesubject and learning about the critical differencesthat exist between them. It also reduces the studytime the arbitrator needs to make sense of diver-gent technical testimony.

“Chess Clock” ArbitrationSometimes, the parties may be willing to agree

to present their case and cross-examine witnesseswithin a specified amount of time. Called the“chess clock” technique, this hearing manage-ment tool focuses the parties on what they needto accomplish at the hearing. However, thisprocess should not be forced on the parties.Some experienced arbitrators caution that thechess clock technique should only be used byagreement of the parties and that agreementshould be adequately documented and confirmedby the lawyers as well as the parties because it is amodification of their arbitration agreement.

Tallying the time used can be done by the ar-bitrator, a court reporter, or another person. Irecommend that the arbitrator announce thetime used and remaining at least twice a day, firstat the beginning of the hearing day and second atthe end of that day. This way, if there are anyproblems with timekeeping, they can beaddressed promptly.

Some of the available time for each side shouldbe allotted to cover unexpected events and delays.Some arbitrators recommend giving the arbitra-tor discretion to grant additional time if neces-sary for a party to fully and fairly present its case.

ConclusionArbitration remains a very valuable, useful and

flexible dispute resolution process. Thoughtfuluse and adaptation of the arbitration process canpreserve and protect arbitration as an efficient,cost-effective and user-friendly private procedurefor the fair and prompt resolution of a wide rangeof civil and commercial disputes. n


Apreliminary hearing is a required first step in most arbitra-tions to ensure that the process is orderly and efficient. Thishearing, however, is not enough to ensure a timely arbitra-

tion that will meet the goal of holding the final hearing within oneyear of the filing of the demand. This article provides insights andtips on critical issues that help meet this goal: hands-on management

Michael Chambers is a member of the AAA commercial,large complex case, employment and international panels.He has often served as a trainer at AAA training programsand previously co-chaired several national panels of arbitra-tors created in class action settlements. Licensed to practice law in New York, Washington,D.C., and Alabama, he is of counsel to the Alabama-based firm of Cabaniss, Johnston,Gardner, Dumas & O’Neal LLP. He holds a J.D. degree from the University of Alabamaand a doctorate from the University of Geneva in Switzerland. He has been certified as aCivil Trial Advocate by the National Board of Trial Advocacy.

A Preliminary Hearing Is NotEnough: Tips for a Well-Managed ArbitrationBY MICHAEL CHAMBERS

Guidance forarbitrators,

attorneys andparties on how

to conduct an orderly

arbitration.

by the arbitrator, a comprehensive schedulingorder, and a pre-hearing conference one weekbefore the final hearing to resolve any remainingproblems. Although this article is written forarbitrators, it should hold as much interest forattorneys and parties in the process.

1. Issue a Comprehensive Scheduling OrderThe arbitrator must issue a scheduling order

setting deadlines for the completion of all the crit-ical steps in the pre-hearing phase of the arbitra-tion. There are several issues in this phase thataffect the hearing on the merits. These includethe identification of claims, defenses and counter-

claims; the calculation of damages; arbitrabilityand jurisdiction of the arbitrator; the exchange ofrelevant documents; the deposition of key wit-nesses, if allowed or agreed; and the retention ofexperts, the taking of their depositions, if neededand permitted by the arbitrator, and the exchangeof expert reports. If any one of these issues is nothandled in a timely way because of missed dead-lines, the entire schedule can fall apart becausemost of these issues are linked. Once there is evenone missed deadline, the agreed date for the finalhearing may not work. Then, the arbitrator hasnot helped deliver on the promise that arbitrationwill be faster and less expensive than litigation.


2 A U G U S T / O C T O B E R 2 0 0 9

Reasonable deadlines in the scheduling orderare not enough. Success in keeping to the sched-ule requires getting into more detail at the firstpreliminary hearing so that a detailed schedulingorder can be prepared. You must make sure thatcounsel and the parties meet them. No arbitratorwants to be accused of turning a preliminary hear-ing into a federal pre-trial conference. But, noarbitrator wants to receive a request for a continu-ance weeks before the evidentiary hearing becausedeadlines for document production did not occur,which in turn delayed the depositions, which thenside-tracked the timing and choice of experts. Youknow the problem.

2. Nail Down the Claims, Damages,Counterclaims and Defenses

Here are a few suggestions for the preliminaryhearing to help address some of these potentialproblems. For example, start by asking each sideif the claims, counterclaims, defenses and dam-ages have been sufficiently outlined in the De-mand and Answer. If not, give each side a short

period of time to confirm the claims or counter-claims and then answer consistent with the appli-cable rule governing responses. A short period oftime could be 10 days or even less, depending onthe complexity of the case. The goal is to makesure everyone has notice of the issues before thedocument exchange, the depositions, the selec-tion of experts and the hearing on the merits. Forthese reasons, you want the attorneys and theirclients to decide early what the case is about andstick to it, unless some new claims legitimatelyarise from new information.

3. Establish Reasonable Limits on DiscoveryMost parties agree to some level of discovery

even if, as in the current American ArbitrationAssociation Commercial Arbitration Rules, noneis specifically permitted, apart from the docu-ment exchange. But, even if the attorneys agreeon how much discovery, the arbitrator has theresponsibility to ensure that it does not get out ofcontrol. As a result, the arbitrator should specifi-cally ask how much discovery is really needed andon what topics. You must establish reasonablelimits. If the parties want to serve documentrequests to facilitate the document exchange,

then ask about the type of information and thescope of the requests. For example, you candetermine whether electronically stored informa-tion can be produced in electronic format, orwhether a hard copy of everything must be pro-duced. You can ask at this point if there are anyanticipated areas in which a discovery dispute isexpected. If there are, you may be able to decidethese issues or give the parties guidance beforevaluable time is lost. Establish firm dates for sub-mitting document requests and responses. Then,in your order, direct the parties to immediatelycontact the arbitration provider’s case manager toset up a conference call with you in the event of adispute.

4. Identify Depositions and Calendar ThemNext, if the rules permit depositions, or if the

parties agree to take them, during the preliminaryhearing, ask each side how many they need, thenames of the persons to be deposed, how longeach deposition should take, where the depositionswill be taken and in what order. Asking all these

questions may be overkill in simple cases wherethe attorneys appear to work well together, but itis absolutely necessary in hard fought and acrimo-nious cases. Once these points are discussed, youare in a position to set reasonable limits on discov-ery in the scheduling order. This can head off anyfights before they start. Then, calendar the deposi-tion dates. These dates will naturally follow dead-lines for filing production requests and respondingto them.

In the scheduling order, direct the parties tocontact the case manager or you immediately inthe event that any deadline is not met. If the par-ties comply, you will have the ability to resolvethe problem and keep everyone on track.

5. Plan for Experts Even If the Parties SayThey Don’t Need Them

During the preliminary hearing, ask if therewill be experts. Even if the attorneys say that ex-perts are not anticipated, plan for them anyway.Set a date for identifying experts, since an expertdisclosed late in the process can wreak havoc. Noattorney or client likes to be ambushed by a newopinion. Also, set the date for the filing of anexpert report by each one. The dates should be

Success in keeping to the scheduling order requires thearbitrator to go into more detail at the first preliminaryhearing so that a detailed scheduling order can be prepared.

well in advance of the final hearing. Make surethe scheduling order requires the report to statethe expert’s background, the specific opinions tobe offered at the hearing and the facts uponwhich those opinions are based.

6. Schedule the Completion of Key ActivitiesWell Before the Hearing on the Merits

There are still a few things to plan for in thescheduling order that left undone can torpedothe final hearing. Do not ask counsel how muchtime is needed to hear the case. If you do, theywill tell you how much time it should take.Instead, ask each attorney how much time he orshe needs to present the client’s case and cross-examine the other side’s witnesses. When youtotal each side's response you may have a betteridea of the truth. Hold the attorneys to that num-ber and put their conclusions in the schedulingorder. But just in case, add an additional day.There are two good reasons to do this. First, youdo not want to run out of time and have to sched-ule more hearing days in the future. It could beanother four months before everyone is availableagain. Second, if you have a three-person panel,the additional day can be used for deliberationsand to write a preliminary draft of the finalaward.

Here are my recommended due dates for someother critical items, including subpoenas andexhibit exchanges. Setting the dates sufficiently inadvance of the hearing on the merits allows for amore orderly hearing. For sending subpoenas tothe arbitrator for signature, I recommend 30 cal-endar days before the final hearing; for the physi-cal exchange of exhibits, exhibit lists, and witnesslists in the anticipated order of call, I suggest 21calendar days before the hearing; and for writtenobjections to exhibits and service of subpoenas, Irecommend 14 calendar days before the hearing.The early completion of these activities should beroutine. If any one of them is not completedbefore the hearing, you will hear about it at thebeginning of the final hearing and have to spendthe first couple of hours trying to resolve theproblem. Using hearing time to resolve pre-hear-ing matters could make you run out of timebefore both sides have completed their presenta-tions.

7. Schedule a Final Pre-Hearing ConferenceBefore the Hearing on the Merits

During the preliminary hearing, schedule afinal pre-hearing conference call. I find it works

best to schedule this conference roughly oneweek before the commencement of the finalhearing. Include this conference in the initialscheduling order, along with the purpose of thecall, which will address, and hopefully resolve,any remaining issue concerning exhibits, witness-es or subpoenas.

In my opinion there is no better way to investyour time after you have issued the schedulingorder than in the final pre-hearing conferencecall. It is similar to the pre-trial conference heldin federal court, but without all the homework.

When the final pre-hearing conference call isheld, all of the items to be exchanged or servedwill be completed if the parties adhered to thedue dates in the scheduling order. But if there is aproblem, you have one week to resolve it. Then,one week later when the final hearing starts, youcan immediately begin to hear opening state-ments or the first witness, not a litany of com-plaints.

ConclusionA well-managed, orderly process is critical to

ensure that arbitration is faster and less expensivethan litigation. This can be accomplished with athorough preliminary hearing conference thatincludes hands-on management by the arbitrator,a comprehensive scheduling order, and a pre-hearing conference one week before the finalhearing to resolve any remaining problems.Many steps in the pre-hearing phase of arbitra-tion are interdependent. If one is delayed, theothers can be as well. This can delay the finalhearing. By using these recommendations, thefinal hearing should take place as scheduled andbe completed in an orderly manner within theallotted time. n


• Exhibits and exhibit lists: physically exchangethem 21 days before final hearing.

• Witness lists in the anticipated order of call:exchange them 21 days before final hearing.

• Witness subpoenas: send to panel for signature30 days before final hearing; serve them 14 daysbefore the final hearing.

• Written objections to exhibits: submit them 14days before final hearing.

Recommended Due Dates forRoutine Activities in Arbitration

Arbitration has three distinct phases: the pre-hearing stage; the evidentiary hearing; and

the post-hearing period, which begins at the conclusion of the hearings until the arbi-

trator issues the award. As arbitrators who have heard hundreds of commercial and

construction cases, we have come across numerous mistakes attorneys make—in cases large

and small—mistakes that can negatively affect the time the arbitration takes, the cost of the

process, and even more significant from the clients’ point of view, the outcome.

MISTAKES2020C O N S T R U C T I O N

ATTORNEYS MAKE IN ARBITRATIONAND HOW TO AVOID THEM

MISTAKESTHE TOP

How to avoid commonmistakes and replacethem with tools forpersuasive advocacy.

By Judith B. Ittigand Harold Coleman, Jr.The authors both serve on the American Arbitration Association’s national panel of arbitrators for com-mercial and construction disputes and both are Fellows of the College of Commercial Arbitrators. Mrs.Ittig, an attorney in Ittig & Ittig, P.C., based in Washington, D.C., is also a Fellow of both the AmericanCollege of Construction Lawyers and The Chartered Institute of Arbitrators (London). The authors can bereached by e-mail, Mrs. Ittig at [email protected] and Mr. Coleman at [email protected].

To help attorneys recognize the mistakes theyare making when representing parties in arbitra-tion, we compiled a list of the ones we see mostoften and suggest ways to handle the particularissue or task in a manner that will be helpful to thearbitrator. These strategies could help attorneysimprove the quality of their arbitration advocacyand obtain for their clients the benefits that arbi-tration was designed to produce.

FIVE PRE-HEARING MISTAKES AND HOW TO AVOID THEM

1. Postponing Itemization of Damages andGrounds for Recovery

Attorneys often file demands for arbitration andanswering statements that do not specify the fullnature of, and dollar amounts involved in, theclients’ claims and counterclaims. Vague arbitral

pleadings can be made because the arbitrationrules of the American Arbitration Association(AAA) do not require much specificity at this point.General demands and answers are understandableif the claimant wants to get the arbitration under-way as soon as possible; the claims and damages arenot completely known; or the respondent is stillconsidering its counterclaims and offsets, which itdoes not want to present until the claimant’s claimsare fully fleshed out.

But when attorneys choose to do only what isminimally required by the AAA rules, even whenthe legal theories and damage calculations areknown, they are missing an early opportunity tohighlight their cases for the arbitrator.

Recommended Solutions

The statement of claims does not need to followthe format of a complaint in a lawsuit, but it should

C O N S T R U C T I O N

set forth the factual grounds and legal theoriesfor recovery, and all types of damages or otherrelief sought, both legal and equitable, as well asthe amounts claimed.

The answering statement should do the samewith respect to the defenses, counterclaims andoffsets. In a recent arbitration involving allegationsof malpractice by a real estate broker, after fivedays of evidentiary hearings, the arbitrator deniedthe claimant’s request for damages because the de-mand asserted only a claim for breach of contract,even though a negligence claim could have beenasserted as well. Possibly counsel assumed, wrong-ly, it turns out, that the arbitrator would awarddamages for negligence if the claimant proved thatthe broker’s conduct fell below the requisite stan-dard of care. However, the arbitrator determinedthat he was limited by the scope of the disputespresented for arbitration.

Indicating all the theories of recovery andrelief sought, including the calculation of mone-

tary damages, makes it possible for the arbitratorto determine whether the case will be complex orsimple, and if it will be dominated by factual orlegal issues. It will also help the arbitrator under-stand the case and recognize which pre-hearingprocedures need to be scheduled.

2. Fear of Committing to a Schedule

Poor or delayed scheduling of the arbitrationcomes about because the parties’ attorneys do notrealize why they are required to participate in thepreliminary hearing (called a “preliminary man-agement hearing” in the AAA ConstructionIndustry Arbitration Rules); therefore, they donot adequately prepare for it. They often regardthis hearing as the responsibility of the arbitrator.They expect that the arbitrator will set the sched-ule for pre-hearing events, such as exchanges ofwitness lists and exhibits. As a consequence, theattorneys often end up requesting postponementsafter the schedule is established, and then accuseeach other of delaying tactics.


Attorneys should be prepared to answer thearbitrator’s questions, or initiate discussion, abouttheir needs for discovery, a site visit, and experts.

There are a number of steps attorneys should taketo prepare for the preliminary hearing.

Since scheduling the proceeding is an impor-tant goal of the preliminary hearing, the attor-neys should find out the dates on which theirclients and witnesses (both fact and expert, if any)will be available. Before the preliminary hearing,the attorneys should meet and confer to discuss:

• The scope of document discovery.• The dates for exchanging documents, exhibit

lists and witness lists.• The dates for exchanging their experts’

reports.• Whether either party plans to file any pre-

hearing motions and if so, the dates for filingand replying to them.

• Whether a site visit is needed.• How much time each side will need for

direct and cross-examination (and perhapsrebuttal) at the evidentiary hearing. It is pru-

dent to plan for rebuttal, even if the timeallotted is not used.

• Available dates for the evidentiary hearing.As a result of the meet and confer, the attor-

neys should have a jointly outlined schedule of allpre-hearing activities as well as possible dates forthe hearing that accommodate both clients andtheir witnesses. The dates and amount of timereserved for the hearing on the merits should berealistic because arbitrators take seriously theirduty to manage the arbitration efficiently andthey are bound by law to postpone hearings onlyfor good cause shown. Moreover, they are notrequired to grant a postponement request thatlacks good cause, even if all other counsel were toagree to the request, unless the underlying arbi-tration agreement provides otherwise, which isnot usually the case.

Unfortunately, litigators are notoriously inex-pert at estimating how much time they need topresent their case. The attorneys could suggestthat the arbitrator set aside a day or two of addi-tional hearing time in case it is needed. Blockingout more hearing time makes more sense thanscheduling an inadequate amount of time andthen trying to arrange additional days for the

2 M A Y / O C T O B E R 2 0 1 0

When attorneys choose to do only what is minimallyrequired by the AAA rules, even when the legal theories and damage calculations are known, they miss an earlyopportunity to highlight their cases for the arbitrator.

hearing at the last minute.Because the schedule and hearing dates agreed

to at the preliminary hearing will be incorporatedinto a case management order by the arbitrator andbe considered final, the attorneys should notifytheir clients and fact and expert witnesses of thehearing dates as soon as possible after the prelimi-nary hearing. They also should alert the arbitratorand opposing counsel as early as possible if anyscheduling problems arise and propose a remedythat does not alter the overall schedule. Potentialremedies include extending the hearing day, reduc-ing the break and lunch periods, taking witnessesout of order, and supplanting in-person testimonywith telephone testimony or with transcripts of thewitness’s deposition. In proper situations, the wit-ness’s affidavit can be an effective substitute.

Finally, we suggest that attorneys considerallowing their clients to participate in the prelim-inary hearing. It is good for clients to learn abouthow the arbitration will be conducted. Clientswho learn this tend to have a more positive atti-tude toward, and respect for, the ultimate award.

3. Buried Exhibits and Not Having a “RedBook” of Core Documents

Too often, documents that will be used asexhibits in the evidentiary hearing are haphazard-ly assembled and too little thought is given toorganizing them in a way that is useful to thearbitrator. It is a mistake to prepare exhibitswithout consulting with opposing counsel toavoid duplication.


The arbitrator has to juggle books of exhibitssubmitted by both parties. It takes a surprisinglylong time for the arbitrator to locate the portionsof exhibits referred to during the evidentiaryhearing, especially when the exhibit is a multi-page document.

Each exhibit should be numbered. In addition,the documents that make up each exhibit shouldhave a unique consecutive identifying number (orcombination of letter and number) on every page.

Exhibits that are not pre-marked and intro-duced at the hearing should be labeled for easyinsertion with the pre-marked exhibits (e.g.,Exhibit 10A). You don’t want the arbitrator tohave a mass of loose pages that can be misplacedor put aside.

To make it easier for the arbitrator to workwith the parties’ exhibit books, the attorneysshould remove from each party’s separate bindersuncontested “core exhibits” (e.g., in a construc-tion dispute, the construction contracts, plansand specifications, change orders, etc.) that will

be referred to frequently and place them in ajoint exhibit binder sometimes called a “RedBook.” In addition, they should remove docu-ments of the same type (e.g., invoices, time sheetsand payroll records) that will rarely be referred toindividually (“bulk documents”) and place themin a separate bulk document binder.

Eliminating duplicate exhibits reduces the riskthat the arbitrator’s notes from the hearing willbe scattered on different copies of the sameexhibit. The attorneys should not want importantnotes to be overlooked when the arbitrator re-views the exhibits during deliberations. Keepbulk documents separate so that they do notinterfere with the exhibit books on which most ofthe testimony will be based.

4. Not Disclosing Demonstrative or SummaryExhibits

Attorneys expect arbitrators to welcome demon-strative or summary exhibits and often fail to antic-ipate that the adversary might object to the use ofsuch an exhibit. They may think, rightly or wrong-ly, that the source documents and testimony for asummary exhibit (such as a timeline or chart) havealready been admitted into evidence, so there is nobasis for any objection. For these reasons, attorneysoften fail to disclose their intention to use suchexhibits prior to the attempted introduction at theevidentiary hearing. Sometimes summary exhibitsare not prepared until just before the hearing clos-es. Sometimes they are purposely not disclosed inorder to catch the other party off guard.


Counsel should pre-qualify summary anddemonstrative exhibits in advance of their use.Doing so will save time during the hearing andavoid the objection that they are “surprise”exhibits. In one case, a scale model of a dam,made at great expense out of Plexiglas with work-ing parts, was excluded from evidence because itwould have been too time-consuming for theother party to check the model for accuracy andcompleteness.

In another case, a sample window and framewere not admitted into evidence because ofobjections as to whether the sample conformedto the window that was installed. The purpose forwhich the sample was offered might have beenclarified in a pre-hearing setting and any objec-tions could have been overcome. At the hearing,it was too late.

Summary exhibits should only summarize andnot add new information. The attorney risks los-ing the opportunity to use a helpful exhibit if it



contains facts or opinions that were not elicitedin testimony.

If admissibility is not addressed prior to thehearing or at least prior to the attempted intro-duction, and the adversary voices a strenuousobjection, the arbitrator may get the impressionthat there is something incomplete or misleadingabout the exhibit, or that it contains informationthat was not properly placed in evidence. Even ifthe arbitrator allows it to be used, the exhibitmay not be given the attention it should if itsadmission was surrounded by so much controver-sy. Worse yet, the arbitrator may feel compelledto postpone the hearings until the other party hasreviewed the exhibit, thereby delaying the pro-ceeding.

5. Not Requesting the Form of the Award

Attorneys err when they fail to tell the arbitratorthe format of the award they want. This couldresult, on the one hand, in anaward that does not address everyclaim and counterclaim submittedto arbitration, or it could be miss-ing specific language that is useful,even necessary, for a party to initi-ate further proceedings. On theother hand, it could result in amore extensive, detailed and costlyaward than the parties think isrequired or wise.

For years, lump-sum awardsstating which party prevailed,with no explanation of the result,were standard. Arbitrators maycontinue this practice under theAAA Commercial ArbitrationRules. Rule R-42 of these rulesprovides that arbitrators are notrequired to issue a reasoned award unless one isrequested before their appointment. However,the arbitrator has discretion to grant a request fora reasoned award at a later time.

The default award under R-44 of the AAAconstruction rules calls for “a concise writtenfinancial breakdown of any monetary awards and,if there are non-monetary components of theclaims or counterclaims, the arbitrator shallinclude a line item disposition of each non-mon-etary claim or counterclaim.” A recent amend-ment of that rule provides that the parties mayrequest “a specific form of award, including a rea-soned opinion, an abbreviated opinion, findingsof fact or conclusions of law.” There is a timingrestriction on this request: it must be madebefore the conclusion of the first preliminaryhearing. After the conclusion of that hearing, the

parties may not change the form of the awardwithout the arbitrator’s express consent.


The attorneys should find out if their clientswould prefer to know the reasons behind thearbitrator’s decision, and advise them that a rea-soned award will cost considerably more than thestandard commercial or construction award. Thereason is that the arbitrator charges for “studytime” and the time it takes to draft and finalizethe award. It will also take longer to obtain.

If both parties decide a reasoned award isworth the extra cost and time involved, the attor-neys should advise the arbitrator as early as possi-ble so that he or she knows to take notes of theproceedings in sufficient detail.

TEN EVIDENTIARY HEARING MISTAKES AND HOW TO AVOID THEM

6. Failing to Provide a RoadMap of the Case

It is a mistake to limit theopening statement to a recita-tion of the events that led to thedispute. Attorneys should con-nect the facts with the claimsand the supporting evidence tobe presented, and cast doubt onthe other party’s position.

Recommended Solution

The attorneys should presenta road map in their openingstatements that guides the arbi-trator to the issues and the sup-porting evidence. Openingstatements should do more than

explain the “story” behind the dispute. They aremore effective when they give the arbitrator aperspective from which to view the evidence.

This is a good time for the attorneys to usegraphics or other visual material, for example,summary charts, tables, graphs, photographs,blowups of contract language, or other items thatwill be introduced as exhibits. As noted inMistake Four, all such exhibits should be dis-closed prior to use.

7. Not Correlating the Elements of Proof andthe Order of Witnesses

There is great risk in thinking that disorder inthe testimony can be cured by a closing statementthat ties everything together. It is vital for coun-sel to plan the sequence of testimony. Withoutplanning, the order in which the evidence is pre-

4 M A Y / O C T O B E R 2 0 1 0

Attorneys expectarbitrators to

welcome demon-strative or sum-

mary exhibitsand often fail

to anticipate anobjection fromthe adversary.


sented could simply confuse the arbitrator andlead to an adverse award.


Each attorney’s case should be made in a logi-cal sequence, which does not always meanchronological. There are two distinct basic con-cepts to keep in mind: elements of proof andorder of proof. For many cases, a chronologicalapproach makes the most sense. But a differentmethod might also work well: for example, a top-ical approach that deals with each item of claimin sequence. Or, with a construction case, forexample, claims of specialty subcontractors couldbe dealt with separately.

The guiding principle should be to present theevidence in a manner that would be most helpfulto the arbitrator. (See Rules R-30, R-31 and R-32of the AAA commercial rules and Rules R-32, R-33 and R-34 of the AAA construction rules.).

) Counsel is allowed to ask the arbitrator atdifferent points during the hearing if he or she isfollowing the evidence presentation, or whether adifferent approach would work better. Most arbi-trators will respond to such inquiries. In ouropinion, many attorneys fail to take this opportu-nity to ask the arbitrator if the case makes sense.

8. Repeating the Direct Examination on Cross

Two objectives of the cross-examiner are: (1)to catch the witness in a lie or mistake that chal-lenges his or her credibility, and/or (2) to showthat the witness has made an honest mistake oromission when the correction of that mistakehelps your case. Without luck, these objectivescould be achieved only if the cross-examinerthoroughly prepared the questions in advance. Ata minimum, counsel should prepare for cross byoutlining the main headings for the cross-exami-nation, concentrating on the elements of proofthat are at issue.

Attorneys who ask questions on cross-exami-nation that are similar to those asked during thedirect examination appear to be unprepared.Perhaps they hope the witness will give a differ-ent answer the second time around, or will elabo-rate in the second answer, revealing an inconsis-tency or giving new ground to probe. It often justallows the witness to repeat testimony that isharmful to the questioner’s case.


The attorney who conducts a cross-examina-tion is the real witness. Cross should be used toconfirm the views of the cross-examiner.Repeating questions asked on direct and gettingthe same answers usually only reinforces the tes-

timony in favor of the other side. The goal of thecross-examiner should be to delve into thoseareas where the witness must agree with yourpoint of view, or be tied to a statement that canbe contradicted.

It is helpful to the arbitrator if the questionson cross do not wander. One approach is to breakthe witness’s testimony into topics so the arbitra-tor can understand how the witness’s answerscorrelate to the disputed issues. Considerannouncing each new topic to the witness beforebeginning the examination. For example, counselcould say: “Now, let’s turn to the discussion youhad with the lender on the day you received thenotice of foreclosure.” Both the arbitrator andthe witness will benefit from this approach.

Lastly, it is vital to be respectful of witnessesduring cross-examination. Arbitrators value civil-ity and respect. It is distracting to the arbitratorto have to manage an attorney who behaves badlyto a witness under cross-examination. Moreover,the witness’s bad reactions could negatively affectthe arbitrator’s view of the cross-examiner’s case.

9. Surprise Exhibits

We previously alluded to the problem of sur-prise exhibits submitted for the first time at thehearing on the merits, suggesting the importanceof exchanging all exhibits before the evidentiaryhearing. We raise it again here because this iswhere the consequences of the error will be felt.

The arbitrator’s pre-hearing order commonlysets a date for the exchange of all exhibits thatwill be used at the hearing, with the normalexception of exhibits used in cross-examinationor rebuttal.

Unless there is a very good reason why a newexhibit should be admitted, an objection to thatevidence by opposing counsel is likely to be sus-tained. Even if the new exhibit is admitted, thearbitrator may postpone the hearing to allow theopposing party time to examine it and prepare aresponse. Arbitrators want to be fair to both par-ties. They are more likely to admit an exhibitunder questionable circumstances if they knowthat any prejudice to the other party can be mini-mized or overcome.

The arbitrator may also assess costs and feesassociated with responding to a new exhibit.Introducing a surprise exhibit can hurt the credi-bility of the attorney who introduced it.

There are, of course, allowable surprises, forexample, for newly discovered evidence. But thatis rare. It is not often that pertinent evidence notavailable earlier is discovered.



A good faith “meet and confer” with opposingcounsel often works well to resolve any issueswith late exhibits. Even if opposing counsel doesnot agree, the attempt to resolve the issue outsideof the hearing could persuade the arbitrator toadmit the exhibit if the basis for the adversary’sobjection seems thin. Arbitrators appreciate whenthe attorneys have first tried to work things outthemselves and they sometimes give credit forthat effort when the objection can be minimized.

10. Not Providing a Clear, Concise Calculationof Damages

This mistake is probablythe most common, and themost dangerous for the client.The attorneys who make thismistake probably fail toinclude sufficient informationabout damages in the demandor answering statement (seeMistake One) and do not filean amended damages calcula-tion. These attorneys place allthe emphasis on why theclient is entitled to recover (the “story” of thecase) and give little or no attention to quantum(i.e., the amount of damages being sought).


Counsel should always calculate the damagesclaimed before the hearing commences, and cre-ate an exhibit that will show the arbitrator eachitem of claim and the related damages amount.This exhibit helps keep all claims and damages inplain sight of the arbitrator and helps prevent anyof them from being inadvertently overlooked.

An attorney’s failure to make a claim ordefense understandable may cause the arbitratorto conclude that the claimant or respondentfailed to meet its burden of proof. Even whereliability for one or more claims has been estab-lished, the arbitrator may decide not to awarddamages if they are not understood.

A question could arise whether a change onlyin the amount of a claim should be considered anew claim. Rule R-6 of the AAA commercialrules provides that new or different claims maynot be added after the appointment of the arbi-trator without his or her consent. The rule saysnothing about increases or decreases in theamount of a claim. However, Rule R-6 of theAAA construction rules provides that increases ordecreases in the amount of a claim do not give

rise to a new or different claim. This rule allowschanges in the amount of a claim at any timebefore the hearings are closed unless the arbitra-tor establishes a different date.

Possibly changes in the amount of a claim areacceptable under the commercial rules. But thatcannot be assured. Counsel should avoid the pos-sibility that the commercial rules might be inter-preted differently by making clear damagesclaims at the outset.

If the damages increase for any claim, counselshould formally amend the demand or answeraccordingly. If damages decrease, however, it is

not as important to amend theclaim because counsel can offerto enter into a stipulation.

11. Not Specifying All RelatedRelief Requested

This is another mistake ofomission. It usually happenswhen the attorney assumes thatthe relief is authorized by theparties’ contract.

Making assumptions can getattorneys into trouble. Forexample, assuming that it is not

necessary to request certain types of relief (forexample, declaratory relief, specific performance,interest on the award) is a serious error. Arbi-trators have been known to omit relief not specif-ically requested, even when they have contractualauthority to award such relief. There have evenbeen construction cases in which a party forgot todemand contract retention because the amountwas undisputed.

Requests for attorney fees can be tricky be-cause Rule R-43(d)(ii) of the commercial rulesand Rule R-45(d)(ii) of the construction rulespermit such an award only under three condi-tions: the parties’ arbitration agreement providesfor the recovery of attorney fees, such fees areauthorized by law (i.e., there is a statutory basisfor the recovery of attorney fees), or the partieshave agreed that attorney fees may be awarded.

Attorneys have been known to put an attorneyfee request in their demand for arbitration for thepurpose of luring the opposing party intoanswering with its own request for fees. This isan important practice point because some arbi-trators consider a reciprocal request for attorneyfees to be a fee-shifting agreement.


If there is no attorney fee clause in the parties’contract, counsel should think about whether it isprudent to request attorney fees for the prevail-

6 M A Y / O C T O B E R 2 0 1 0

Each attorney’scase should be

made in a logicalsequence, whichdoes not always

mean chronological.

ing party.It is the responsibility of the attorneys to make

certain there is no misunderstanding about therequested relief and how it is calculated. It ishelpful to reference the basis for claims for attor-ney fees and various types of interest. For exam-ple, a claim for interest on the award could bebased on the contract clause stating the interestrate, while a claim for pre-judgment interestcould be supported by a statute.

Attorneys should present interest calculationsas a per diem amount so the arbitrator can easilycalculate the total up to the date of the award. Itis also appropriate to request interest on theaward itself until paid.

The date on which interest starts to run couldvary. It could be the date of the invoice, or thedate of completion, or the date of a lien filing, toname just a few of the options. Counsel should beclear about the date the arbitrator should use andexplain why it is appropriate.

12. Not Listening or Reacting to the Arbitrator’sQuestions

Attorneys can become so focused on their ownquestioning, the pace of the arbitration, and thesmoothness of their presentation, that they donot listen closely to the questions asked by thearbitrator.


Attorneys must be active listeners, especiallywhen the arbitrator asks a question of eithercounsel or a party’s witness. An active listenerevaluates what the arbitrator is asking and ana-lyzes why the question is being asked. Has thearbitrator missed an important point or misun-derstood the testimony or document? Or, is thearbitrator opening a new line of inquiry or argu-ment that counsel needs to address?

Attorneys should clearly answer any questionasked by the arbitrator. A question by the arbitra-tor give the attorney an opening to ask that ques-tion of the current witness or another witness, ifthe answer would be to the client’s advantage.

Counsel should never admonish the arbitratorfor pursuing a topic or line of questioning. Anarbitrator who believes that the answer to a ques-tion is necessary to a complete understanding ofthe dispute will resent any attempt by counsel toterminate that questioning. If the arbitrator istruly on the wrong path, then counsel should sethim or her straight, but in a diplomatic way.

If the arbitrator’s question was helpful, theattorney should remember it when preparing theclosing argument. Referring to an arbitrator’squestion and emphasizing the correct answer can

enhance the impact of that argument.

13. Failing to Notice that the Arbitrator DoesNot Understand the Testimony

This error is a corollary to the last mistake.However, the cues lie not in the arbitrator’squestions, but in his or her facial expressions.Attorneys miss them when they are not watchingthe arbitrator.


An attorney should always be aware of thearbitrator’s reactions during the evidentiary hear-ing. A colleague could be asked to assist counselin making these observations. An arbitrator whoappears to be confused or uneasy, or whispers toa colleague on the panel, might need a clearerexplanation of some point made in the testimony.

It is not out of line for an attorney to ask thearbitrator if she or he would like to hear moretestimony about a particular subject, or discusspreviously given testimony that could revealwhether the arbitrator understood it. Finding outwhether the arbitrator understands a claim isacceptable practice.

The informality of arbitration makes it possi-ble to converse with the arbitrator at the hearing.That is a key advantage of arbitration. During atrial one cannot ask the jurors, or a judge in abench trial, whether they have heard enough andunderstand the presentation. But that can bedone in arbitration. Most arbitrators are recep-tive to counsel engaging them in a dialogue aboutthe claims so long as he or she is not searchingfor the arbitrator’s point of view and conclusions.

14. Using Rebuttal to Repeat Earlier Testimony

This is a mistake similar to Mistake Eight. Re-calling a witness to rebut testimony given on crossis fine, but having that witness repeat earlier testi-mony is not. The arbitrator could exclude repeti-tive or cumulative testimony based on an objectionor on his or her own initiative. Rule R-31 of theAAA commercial rules permits the exclusion ofevidence deemed by the arbitrator to be “cumula-tive or irrelevant,” and Rule R-33 of the construc-tion rules authorizes the arbitrator to exclude testi-mony that he or she deems to be “cumulative,unreliable, unnecessary, or of slight value com-pared to the time and expense involved.”


Rebuttal testimony should be fresh. It oftenrequires the use of a new witness. Attorneysshould present in rebuttal only evidence thatqualifies, contradicts or nullifies the adverseparty’s evidence. Repetition may merely serve to



dilute the strength of earlier testimony.

15. Making a Closing Statement that Does NotMatch the Opening or Fails to Highlight theMost Important Exhibits or Testimony

We have heard attorneys say in closing thatnow they finally understand their case and arefully convinced of its simplicity and merit. Whenthis happens, the closing statement is probablyvery different in content and tone from the open-ing statement.

It is helpful to write both statements beforethe evidentiary hearing begins. This will give theauthor a better understanding of the case andavoid the disconnect between opening and clos-ing statements.

As the hearing progresses, new questions mayarise, requiring additional analysis or revision.Therefore, it will be necessary to change the clos-ing statement. Thus, a closing statement preparedbefore the hearing is a work in progress until allwitnesses have completed their testimony.Nevertheless, it can serve as a checklist to makesure that the revised statement addresses all theelements of proof required to prevail.

Before presenting the closing statement, coun-sel could prepare for the arbitrator a bullet-pointoutline (or give the arbitrator a binder with thekey exhibits and arguments that support eachclaim). This outline will focus the arbitrator’sattention on the closing and may provide enoughinformation so that the arbitrator will not need totake notes at the same time. We guarantee thatthe arbitrator will refer to the closing outlineduring deliberations and in writing the award.

Arbitrators often ask questions during closingargument. Counsel must be prepared to respond.Many arbitrators, the authors included, oftenschedule closing argument to follow the receiptof post-hearing briefs so they can clarify anypoints they did not fully understand.

FIVE POST-HEARING MISTAKESAND HOW TO AVOID THEM

16. Adding New Claims for Relief

It is usually less costly and more efficient toinclude all claims arising out of a particular proj-ect or transaction in one arbitration, rather thancommence separate arbitrations for multipleclaims. Attorneys who do not identify all claims inthe demand or answer sometimes find themselvesadding new ones later on. Adding new claims inthe post-hearing phase condemns them to beingdisallowed and makes the attorney who made thismistake look unprepared or perhaps sly.

A note of caution: If the amount of damages

sought for any claims have changed, and the evi-dence supports the change, explain to the arbitra-tor in the closing statement or post-hearing briefwhy the claim is not new or different and providethe reasons why it should be considered.

New claims that attorneys can add in the post-hearing phase are claims for arbitration costs andarbitrator fees caused by the adversary’s delaytactics or obstreperous behavior.

17. Including New Arguments in Post-HearingBriefs

It is just as disconcerting for an arbitrator tofind new legal arguments in a post-hearing brief,as it is to find new claims. If a different legal analy-sis is needed to rebut contentions made by theopposing party during the hearing, counsel shouldexplain that fully to the arbitrator in the brief.

It is best to avoid causing the arbitrator toreopen the hearing. Under Rule R-36 of the AAAcommercial rules and Rule R-38 of the construc-tion rules, the arbitrator may reopen the hearingif there is a need for further information. Post-hearing briefs that direct the arbitrator to the evi-dence needed to decide the dispute should pre-clude reopening of the hearing.

A practice point: Attach judicial opinions orstatutory law to the post-hearing brief. Arbitra-tors appreciate having at hand the law uponwhich the parties are relying.

18. Not Highlighting the Most ImportantExhibits or Testimony in the Post-Hearing Brief

We have said that the closing statement shouldmatch the opening. But that doesn’t mean thatthe post-hearing briefs should match the earlierbriefs. Post-hearing briefs should do more thanjust restate the pre-hearing brief. If they don’t,they are likely to be disregarded. The post-hear-ing brief should address issues and evidence ofparticular concern to the arbitrator. It is wise toask the arbitrator at the close of the evidence ifhe or she has any concerns that should be ad-dressed in the post-hearing brief. The answer canbe very revealing. This procedure is more com-mon in arbitration than in court.

Post-hearing briefs should:• Use sub-sections to delineate the elements of

proof.• Refer to significant testimony, particularly

unrebutted testimony. Quote from the hear-ing transcript, if there is one.

• Emphasize the failings in the other party’sproof.

• List the damages sought and how they werecalculated.

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• Attach key exhibits to the post-hearing brief.

19. Not Providing the Arbitrator with aProposed Award

Even if the attorneys did not make MistakeFive (failing to ask for a particular type of award),they may make the mistake of not offering thearbitrator a proposed award at the conclusion ofthe evidentiary hearing. If post-hearing briefs areto be filed, the attorneys should attach a copy oftheir proposed award to their briefs.

The proposed award should address each itemof relief sought for each claim and break down thedamages into subcategories. A lump-sum award isoften unsatisfactory, as it does not tell the clientanything about the components of the award.

Counsel for the respondent should be especial-ly careful to include any offsets in the respon-dent’s proposed award.

Itemizing the recovery of damages in the pro-posed award may be necessary if, for example,further legal or arbitral proceedings are contem-plated (i.e., the client intends to follow this arbi-tration with another proceeding against insurersor other contracting parties). Without a break-down of the amount awarded, it may be impossi-ble for a party to determine if it prevailed onclaims covered by insurance. An itemized awardmay also be needed to pursue other parties, forexample, suppliers or subcontractors.

Further proceedings may require that the awardcontain particular language. Recovery under con-sumer protection laws, for example, may dependupon certain findings having been explicitly stated.Counsel for the party who intends to file furtherproceedings should include such language in theproposed award, along with a statement explainingwhy this language is important.

If the parties want a “reasoned award,” theyshould discuss with the arbitrator and opposingcounsel what is meant by “reasoned,” since thatterm’s meaning varies among arbitrators andcounsel. For example, the word could meandetailed findings of fact and conclusions of law,or a legal opinion in the style typically issued bymany courts and boards of contract appeals, or abrief explanation of the reasons for the decisionon each claim.

20. Leaving the Hearings Without a Closing Date

Many times attorneys rely on the arbitrator todecide when to declare the hearing closed. It canbe a mistake to do so. Although Rule R-35 of theAAA commercial rules and Rule R-37 of the con-struction rules address the timing of the closingof the hearing, there is enough latitude for an

arbitrator to extend the closing of the hearingbeyond the end of the evidentiary hearing.

The AAA rules call for the hearing to beclosed when the arbitrator is satisfied that therecord is complete and the parties have no fur-ther proof or witnesses to put on (usually uponthe conclusion of the last hearing day). But ifpost-hearing documents are to be submitted, thearbitrator is to close the hearing as of the duedate for those documents.

The attorneys should not assume that an arbi-trator would accept post-hearing briefs or otherdocuments. A request to submit such materialsshould be made at the hearing before the arbitra-tor declares it closed. This way the arbitrator candecide whether to accept post-hearing materials,what they may contain, and whether to permit areply. Once the hearing is closed, it is too late.

Post-hearing briefs are not always desirable. Forone thing, they delay the issuance of the award andincrease the cost of the proceeding. If the hearingis not long, the issues in dispute are few and notcomplex, or the pre-hearing statements and otherwritten submissions are adequate, there is no needfor a post-hearing brief. The attorneys shouldhave a frank discussion with the arbitrator aboutwhether briefing after the hearing is closed wouldbe helpful and whether budgetary considerationsmake it sufficiently valuable.

Rule R-41 of the commercial rules and Rule R-43 of the construction rules provide that the timefor issuance of the award runs from the date ofclosing of the hearing. The attorneys should askthe arbitrator to confirm the date of closing of thehearing before they leave in order to determinewhen the award will be due. In some instances, itmay be impractical or impossible for the arbitra-tor to finalize the award in the time allowed underthe AAA rules. If the parties agree, the time forissuance of the award may be extended.

ConclusionA unique aspect of arbitration, when contrast-

ed with a judicial proceeding, is the extent of theinteraction between the arbitrator and counsel.Because arbitration is a creature of contract, initi-ated by agreement of the parties, the opportunityexists to tailor the process to the individual case.Indeed, the AAA rules specifically provide thatthe parties may vary its rules by agreement.

Avoiding the mistakes described in this articlerequires that attorneys collaborate with eachother and the arbitrator in order to obtain anefficient arbitration, with clearly presented andeasily understood evidence that will allow thearbitrator to carry out his or her decision-makingresponsibilities. n


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American Arbitration AssociationTHE TOP 10 WAYS TO MAKE ARBITRATION FASTER AND MORE COST EFFECTIVE

Forty experienced arbitrators from across the United States were asked what ten things they would tell CEOs and CFOs in order to maximize the benefits of commercial arbitration. The arbitrators represent a broad range of legal and business experience throughout the spectrum of commercial and governmental law. Experience as an arbitrator ranged from two years to forty years.

Arbitrators responding to the survey possessed wide experience in both business and law:

• Partners in large and small law firms

• General Counsel

• Executive Vice Presidents

• Corporate Secretaries in large and small companies,

including family owned enterprises

• Law Professors

• Transaction Attorneys

• Litigation Attorneys

• Former Judges

• Legal Aid Attorneys

• Public Defenders

• US Attorneys

• State Attorneys

• International Law and Business

• State and Federal Agencies

• State Government Elected and Appointed Officials

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But for arbitration to fulfill these expectations, companies and their counsel must evaluate their practices and take steps to en-sure that arbitration does not become the functional equivalent of a trip to court. These “top ten tips,” gleaned from the expe-riences of seasoned AAA® arbitrators, are a good starting point for the true stakeholders – the parties – to understand how to use the arbitration process to further their objectives.

The top 10 ways to make arbitration faster and more cost effective

David L. Evans, EsquireMurphy & KingBoston

India Johnson, President and CEOAmerican Arbitration Association®

New York

By:

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Pay Attention to Your Arbitration ClauseThoughtlessly inserting a boilerplate arbitration clause into your contract can turn a manageable dispute into a more time consuming, expensive and disruptive case.Companies and their transactional lawyers carefully evaluate the business terms in their contracts, but they often reflexively insert a boilerplate arbitration clause from other contracts or a form book. This oversight jeopardizes the inherent benefits of arbitration and could result in a more expensive, disruptive and inefficient proceeding. It is vital to give up-front consideration to the details of the procedures most suitable to any likely disputes under a contract and not simply hope for the best once hostilities have arisen. While an entire article could be written on clause drafting (a checklist of issues is included in the side bar), some key issues to address are:

•Casedeadlines •Discoverylimits •Arbitratorselectionandqualifications •Confidentiality

Courts have fixed rules of procedure regulating most aspects of a case. Arbitration is a creature of contract, enabling the parties to tailor the process to fit their needs and bypass litigation procedures. If you do not take advantage of this critical distinction, you may well be relegated to a more cumbersome and costly proceeding. As an arbitration administrator, the AAA has broad experience in these clause components, but you must include AAA in the clause to access its expertise.

Select Attorneys Experienced in ArbitrationWhile arbitration should be economical and efficient, less experienced attorneys often unnecessarily apply time-consuming litigation processes. While arbitration and litigation are both adversarial proceedings, there are important differences between the two and understanding those differences is critical to the cost- effective presentation of a case. Lawyers unfamiliar with the arbitration process tend to treat arbitration as though itwereacourtproceeding,resultinginrequests(orevenstipulations)forextensivediscovery, evidentiary skirmishes and unnecessary motion practice. Critically, since arbitration should not be burdened with full blown litigation discovery, you should hire a lawyer unafraid to try a case without having deposed every conceivable witness or unearthed every document. And, it is totally appropriate to ask prospective counsel how many arbitrations they have actually tried to conclusion! Make sure counsel understands your business objectives and is prepared to take the straightest path towards the fulfillment of those objectives.

Arbitration is a creature of contract, enabling the parties to tailor the process to fit their needs and bypass litigation procedures.

Checklist for Arbitration Clauses:

•Numberandqualifications of arbitrators•Hearinglocale•Time(caseduration)limits•Discovery(includinge-discovery)limits•Attorney’sfeesandarbitrationcosts(divideequallyorprevailingparty)•PhasedADRregime(meetandconfer, mediation, med/arb hybrid)•Confidentiality(documents, testimony, award)•Dispositivemotions (summary judgment)•Formofaward(reasonedorstandard)•Interimorinjunctiverelief•Governinglawandrules

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Request and Enforce BudgetsYour arbitration decisions should be based on traditional cost-benefit or ROI analyses. Howmanyimportantbusinessprojectsarelaunchedwithoutabudget?Arbitrationshouldbetreatednodifferently.Companiesshouldrequiretheirlawyerstoprepareand regularly update a budget for the various phases of the case (i.e. claim/answer, discovery, witness preparation, experts, hearings, motions, and briefs), justify the line items and track billings against the budget. Alternative fee arrangements such as blended hourly rates, contingent fees or fixed fees should also be considered. Overall, and absent special circumstances (e.g. customer relations or precedential concerns), yourarbitrationdecisionsshouldbebasedontraditionalcost-benefitorROIanalysesfamiliar to most businesses.

Choose the “Right” Arbitrator

Researching an arbitrator with the right expertise, temperament and background is an often overlooked yet essential step. Every arbitration award is rendered by a human being, or panel of them, each with his or her own backgrounds and experiences. Yet, it is surprising how little attention parties devote to the arbitrator selection process, and specifically to identifying an arbitrator with the substantive expertise, temperament and training to be receptive to the evidence. The first opportunity to narrow the field begins with the arbitration clause itself. Ask yourself: if there is a dispute under the contract,whatwillbethelikelyclaim(s)?DoIwantalawyertodecidetheclaims,oranaccountant,oranengineer?Oncethedemandisfiled,andthecaseadministratorhasdisseminatedalistofarbitratorcandidates(subjecttoanyrequirementsspecifiedinthearbitrationclause),businessesshouldreviewthearbitrators’biographies,searchtheinternet and any public data bases, and, if appropriate, solicit feedback from those with experience with the arbitrator. In short, conduct due diligence as you would with any important business decision.

An entire seminar could be dedicated to arbitrator selection, but three additional points areworthnoting.First,theAAA’sEnhancedNeutralSelectionProcessenablesthepartiestointerviewpotentialarbitratorsorposemutuallyagreeablewrittenquestionsto ascertain whether the arbitrator has the proper experience and disposition. The processhelpswinnowthefieldtothosearbitratorswiththeabilitytoexertrequisitemanagementskillsandhandleanyuniqueissuesinthecase.Second,partiesshouldvetcarefullyanyclausewhichrequiresathreepersonpanelandavoidwheneverpossiblea tripartite panel comprised of two party-appointed arbitrators. The running costs of a panel case can be substantial and scheduling becomes more problematic. Third, if there are a flurry of claims under your standard form contract, analyze what is wrong and fix it. An arbitrator cannot be expected to provide relief from a bad agreement.

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Every arbitration award is rendered by a human being, or panel of them, each with his or her own backgrounds and experiences.

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Limit Discovery to What is Essential for the Arbitrator

Establish a strict discovery schedule focused on the exchange of necessary information. Discovery costs are often the largest part of any litigation budget. But this should not be the case in arbitration, especially if the arbitration clause specifies that discovery will be limited to reasonable procedures consistent with the contours ofthedispute.Eveniftheclauseissilent,itisintheparties’mutualinterests(andis the duty of the arbitrator) to develop a discovery schedule that is restricted to the exchange of information necessary (not merely desired) for the arbitrator to understandandfairlydecidethecase.Writtendiscoveryrequests(interrogatoriesorrequestsforadmissions)arerarelyappropriate.Depositionsofwitnesseswhowilltestify at the hearings should be avoided, or at least confined to the key decision maker(s). Document exchange is commonplace, but that practice must be given special attention in this age of electronically stored information (ESI). E-discovery has spawned its own cottage industry of consultants and experts, and budgets can easily be exhausted in endless fields of back-up tapes, metadata, .pst files, and TIFF images. Unless the parties can work out an ESI treaty on their own, the issue should be presented to the arbitrator at the preliminary hearing. Even before a case is actually filed, it is prudent to investigate the burden of producing ESI because it could influence the decision on whether to file in the first instance.

Participate in the Preliminary HearingGauge the arbitrator, hear the other side’s position and have a say in develop-ing the schedule. The preliminary conference is the first occasion for the parties to present their positions to the arbitrator and discuss a case schedule. This need not be a lawyers-only gathering. Clients have the right to be present at the preliminary hearing (most are conducted by conference call), and by participating you have the abilitytogaugethearbitrator,heartheotherside’sunfilteredpositionandreacttothe schedule being developed. The product of the conference is a case manage-ment or scheduling order which codifies the arrangements from initial discovery through issuance of the award. Be sure to review its terms. Thereafter, monitor any requestsforcontinuancesorextensionsofthedeadlines,asyouwouldwithanybusiness project.

Limit Motion Practice

Potential motions must be scrutinized, as they are time-consuming and may not have any practical significance. Companies and their counsel should con-sider whether any potential motion truly “advances the ball.” Motions designed to restrict evidence at the hearings (so-called motions in limine) may be inappropriate because the formal rules of evidence do not apply in arbitration, and the arbitrator should rightfully consider evidence designed to further his or her understanding of the case. Similarly, arbitrators may be reluctant to grant dispositive (summary judg-ment) motions absent a stipulation by the parties because one of the few grounds for vacating an award under the Federal Arbitration Act is a refusal to hear mate-rial evidence. Consider suggesting to the arbitrator that any party wishing to file a motion first seek permission so the arbitrator can assess its potential effect on the case. At a minimum, have your attorneys explain the rationale for any motion, and evaluate its possible efficacy in comparison to the risks and costs.

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Monitor any requests for continuances or extensions of the deadlines, as you would with any business project

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Remain Open to Settlement

Keep an open mind and set aside emotions during the case as opportunities for settlement develop. Few lawsuits proceed as scripted, and arbitration is no different. Businesses need to be alert to case developments, and evaluate whether any new in-formation affects the value of the case. Leave your emotions aside. Consider direct talks withtheadverseparty’smanagementortheuseofamediator,andreassesstheoptionsthroughout the proceeding. Indeed, many cases settle during or after the hearings. As arbitration administrator, the AAA usually attempts to include a voluntary mediation step during your arbitration and, when adopted, many cases are settled or partially settled prior to hearing. Even settling some of the disputes in a case can make the hearings lessexpensiveandquicker.

Trust the Expertise of the Arbitrator

Arbitrators have specialized knowledge in your field and are more receptive to the facts of your case than to generalized pleas for fairness and equity. Attorneys who regularly represent clients in arbitration recognize the differences between a jury case and arbitration before someone knowledgeable about the industry or subject matter. Arbitrators want to understand how your case fits into a framework which they already have experienced. Present your claims in the clearest possible manner, with an eye towards demonstrating how the particular facts of your situation warrant relief. Focus onthekeyissuesindispute.Generalizedpleasforfairnessorequityarelesslikelytoresonate with the arbitrator.

Present the Case Efficiently and Professionally

You play a critical role in completing the arbitration as efficiently and persuasively as possible. By the time the first witness is sworn, procedures should be in place to ensure that the hearings flow smoothly. Time limits should be considered. Exhibits books containing stipulated exhibits should be pre-marked, with copies available for all participants, including witnesses. Slides or demonstrative exhibits can be effective pre-sentation tools, particularly for opening statements or complicated technical or damages matters.Thepartiesshouldhavediscussedanywitnesssequencingissues,consideredthe use of video or web testimony and affidavits, and presented any witness disputes to the arbitrator for disposition. Do have a party representative at the hearings. Do not groan,scofforchortleduringanopponent’scaseorslumpinyourchairafteranunfavor-able ruling or testimony. When testifying, direct your comments to the arbitrator and avoid unnecessary sparring with counsel during cross-examination.

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Few lawsuits proceed as scripted, and arbitration is no different.

As the stakeholders with the greatest economic interest, the parties have the most to gain from an efficient, fair and expeditious resolution of their dispute. Businesses, in consultation with in-house and outside counsel, must assume ownership of the arbitration process to leverage the unique benefits of arbitration over court. With a customized arbi-tration clause and careful monitoring of the proceeding, the parties are uniquely situated to rein in costs and produce speedy outcomes. Attention to these ten tips will put the parties on the path towards better outcomes.

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