The 2013 amendments to the AAA
Commercial Arbitration and Mediation
Rules permit arbitrators to adopt a
more collaborative approach to making
procedural determinations in arbitration.
Based on our experiences as arbitrators (and as
attorneys representing parties in arbitration), however,
we find this approach off-putting and ineffective. How
could the arbitrator know what decisions to make on
the procedural issues to be addressed without the
benefit of party input? Might it not be more fruitful to
educate the parties and their counsel on the guiding
principles for making these decisions and the procedural options and to solicit their input?
TOWARDS A MORE COLLABORATIVE
APPROACH TO ARBITRATION
Fortunately, the 2013 amendments to the American Arbitration Association’s Commercial Arbitration
and Mediation Rules permit arbitrators to
adopt a more collaborative approach to
making procedural determinations in arbitration.
Prior to 2013, mediation was an “opt-in”
precursor to arbitration. Rule 9, as amended,
makes it an “opt-out” step, and arbitrators are explicitly authorized to discuss
the possibility of mediation in the preliminary conference. In addition, prior to 2013,
arbitrators generally were not permitted to
serve as mediators in the same case. However, both
clients and neutrals have embraced “med-arb” and
“arb-med” hybrid processes for their potential cost-savings, and such hybrid processes are no longer
prohibited by Rule 9.
Rule 21 pertaining to preliminary hearings now uses
language encouraging a collaborative approach, stating that their purpose is to “organize the proceeding”
so as to achieve a “fair, efficient and economical resolution.” To address the potential “agency problem”
where counsel advocates more extensive discovery
or motions to further their own financial or reputational interests rather than their clients’ interests in
saving time and money, parties are now explicitly
invited to attend.
Similarly, to counteract one-sided arbitration
clauses, Rule 22 now states that discovery should be
available to obtain information that is “relevant and
material to the outcome of disputed issues” but also
requires “equality of treatment” and that the arbitra-
tor must “safeguard each party’s opportunity to fairly
present its claims and defenses.” On the other hand,
under Rule 34, cumulative and irrelevant evidence
can be excluded. Thus, the arbitrator is empowered
to facilitate a discussion with the parties and their
counsel about how to conduct the proceedings in
light of the applicable standards but retains ultimate
responsibility for the fairness, economy and integrity
of the process.
In the preliminary hearing, there are a variety of
procedural mechanisms that the arbitrator may discuss with the parties. For example, if there seems
to be lack of clarity on the issues actually in dispute,
the arbitrator may consider requiring more detailed
statements of claims, counterclaims or defenses.
The parties can also be asked about any issues
regarding the scope of the arbitration or the arbitrator’s authority and the possibility of motions on such
issues can be discussed.
Often, the outcome of a commercial dispute may
turn on the determination of a potentially dispositive issue such as a statutory or contractual
limitations clause or a limitation of liability provision.
In the preliminary hearing, the arbitrator can explore
with the parties whether it might be cost-effective
to permit motion practice or a separate hearing on
the particular issue.
Arbitration takes a flexible approach to the
standards and procedures for the admission of
evidence, subject to the caveat that each party
must be afforded a “full opportunity” to present
“material and relevant” evidence and to engage in
cross-examination. The arbitrator can discuss with
the parties at the preliminary conference whether
testimony can be presented in written or telephonic
form, and even whether an oral hearing is necessary. While the parties might be reluctant in the
course of their contract negotiations or private discussions to dispense with in-person hearings, they
may be able to accept an arbitrator’s suggestion
to such effect. This is of course analogous to the
mediation context where reactive devaluation may
prevent a party from considering a reasonable proposal from an adversary even though it would be
open to it if suggested by a mediator.
About the Author
arbitrates a wide
range of business
disputes for the
Association, International Institute for
& Resolution, and
(FINRA). She is also
a Fellow, Chartered
Institute of Arbitrators (FCIArb). She
teaches courses on
negotiation and mediation at Columbia
University. She is a
recent past co-chair
of the ACR Commercial Section.