Friday, February 21, 2014
Peter Benner has written a short article for the Connecticut Law Tribune on the possible effect of the revision of the Commercial Rules by the AAA, and whether that will solve the organic problems within arbitration.
The problem is that arbitration is becoming just as lengthy and expensive as litigation. When that happens, the attorneys representing clients are likely to choose litigation (unless the contact between the parties prevents that), because it gives them more flexibility in chasing after evidence and offers the chance to appeal any decision.
It seems to me that this is an opportunity for administrative associations like the AAA to aggressively promote the use of arbitration clauses in corporate contracts. If the parties do that, then at least the rules can be defined in advance, and if enforced by the arbitrator(s), will limits abuse of the process by overly-aggressive attorneys. But success does require the arbitrators to take control of the hearings and not allow 'fishing expeditions' for evidence, for example.
If the parties do not have a arbitration clause already in force, and have to agree after the dispute to settle on rules, then those rules can be so loose as to defeat the basic purpose of arbitration - to provide a forum that is quick, final and relatively inexpensive.
It seems to me that arbitrations should be less expensive and quicker than litigation, but does require stern management of the process.