Five Things You Didn’t Know about Arbitration

By Jams

Arbitration is by no means a new option for resolving disputes. Yet, parties and their counsel may not be aware of everything that this ADR method brings to the table. Here are five things you may not know about arbitration.

1. A successful arbitration begins with the initial contract

Parties must set the stage for a successful arbitration when working on contractual terms and everyone is getting along.

“If you want to have an efficient, speedy and economical arbitration, start talking when the underlying contracts are being negotiated,” says Judge Fern M. Smith (Ret.), a San Francisco-based JAMS arbitrator. “Arbitrators are controlled in great part by the wording of the arbitration clause in the underlying contract between the disputing parties.”

This wording, says Judge Smith, can cover a variety of issues such as choice of law and venue, the amount of discovery and the procedural or administrative rules that will apply to the arbitration.

“Although the arbitration clause may be modified by stipulation, that’s much harder to accomplish once a dispute has dissolved into a demand,” says Judge Smith.

2. You have options

While a good arbitration clause written into the initial contract is preferred, parties are not without options if they want to make changes after a dispute arises.

“Because arbitration is purely a contractual process, parties can change their pre-dispute arbitration agreement after a dispute arises,” says Richard Chernick, Esq., vice president and managing director of the JAMS Arbitration Practice.

Parties can:

• Change the institution that will administer the arbitration

• Change the number of arbitrators

• Change the way the arbitrators are appointed

• Define the scope of discovery or information exchange

• Add or delete a fee-shifting provision

3. All evidence is not equal

The reality is that “Arbitrators generally react to quality of evidence, rather than just quantity,” says Judge Richard A. Levie (Ret.), a JAMS arbitrator based in Washington, D.C.

“Counsel should assess carefully which witnesses and documents are most important and necessary to their case,” says Levie. “Identify and focus on that evidence first and foremost. This approach signals to the Arbitrator the importance of such evidence. Do not hesitate to identify secondary evidence, such as authentication evidence or back-up documentation, as secondary evidence and invite the Arbitrator to treat such evidence ‘for the record’ but not essential to determination of the key claims at issue.”

4. Choose Neutrality When Selecting Arbitrators

Selection of the arbitrator may be the single most important consideration in the arbitration process, and it’s best to select someone who is familiar with the law and has a track record of fairness.

“In a three-arbitrator case, avoid selecting as your choice an arbitrator that you believe will be a strong advocate for your case,” says Judge Smith. “It may seem like a great idea, but often such a person will simply annoy not only the other party-selected arbitrator, but also the Chair, who generally is neutral. The result may well be that your position will be seen only in a dissent.”

5. You have an option to appeal

Perhaps one of the biggest myths about arbitration is that there is no avenue to appeal. This is not the case, and hasn’t been for many years. CPR and JAMS have, for many years, offered appellate procedures that provide a formal structure for appeal to either a single arbitrator or tripartite panel. AAA has recently issued its own Optional Appellate Arbitration Rules. Keep in mind that not every arbitration is well-suited to an appeal, but incorporation of an appellate process can lessen the risks and provide some peace of mind.

Hopefully these five facts have helped clear up any misconceptions or even provided new insights into how arbitration can be used to resolve disputes.

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