Preserving Justice, Speed And Economy Of Arbitration

Tuesday, August 1, 2006 - 01:00

William K. Slate II, President and Chief Executive Officer, American Arbitration Association.

It is not known to many, but incorporated into the American Arbitration Association 's (AAA) logo for many years, around three triangles, were the words justice, speed and economy - three foundational principles for the delivery of arbitration and other alternative dispute resolution (ADR) services. The AAA has been loyal to these principles over our 80-year history, but now it is an appropriate time to ensure that arbitration as a process has remained loyal to them as well.

Preserving Justice In Arbitration

The courts have long supported the assertion that arbitration is a change in forum, not a change in rights. As the Supreme Court of the United States stated, "[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum" Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). In addition, the United States Supreme Court has, within the last 15 years, expanded arbitration's role in the resolution of a broad range of disputes including business-to-consumer cases - through decisions in Gilmer v. Interstate/Johnson Lane, 500 U.S. 20 (1991), Circuit City Stores, Inc. v. Adams , 532 U.S. 105 (2001), and Green Tree Financial Corp. v. Randolph , 531 U.S. 79 (2000) - and even class action arbitrations in Greentree Financial Corp. v. Bazzle, 539 U.S. 444 (2003).

Although the courts' (including the U.S. Supreme Court and federal and state courts) support of arbitration is critical to preserving justice throughout the process, it is the role of ADR-administering agencies and neutrals to uphold the standards supported by the courts. The AAA frequently collaborates with industry groups and legal experts to establish due process protocols and specialized rules and supplementary procedures that improve the process in specific dispute areas. Trained, expert arbitrators manage the process and ultimately resolve matters through final, binding awards.

Without the underpinning of ethics and integrity, rules and expert neutrals are not enough to preserve justice in arbitration. The AAA has participated in the creation and update of codes of ethics for neutrals and strict disclosure standards to avoid conflicts of interest. With a continued focus on ethics and commitment to integrity, the AAA's foundational value, we are confident that AAA arbitration provides the access to justice that continues to be supported by the courts.

Preserving Speed And Economy In Arbitration

Over the years, as arbitration has evolved into an accepted method of resolving a wider range of disputes, it has become important for all of us - the AAA and other ADR providers, arbitrators and parties involved in disputes - to make sure that we do not lose sight of the fact that arbitration should be a faster and more economical alternative to litigation, even in the largest, most complex disputes.

We have concerns of gradual increases in the disposition time and costs of arbitration, including arbitrator compensation. In response, we are currently working on a number of projects to reduce the costs and timeframes associated with dispute resolution and to discourage burdensome information exchange and unnecessary, party-driven process delays. However, the AAA has recommendations of leading practices and tools already available to enhance parties' experiences with arbitration.

An arbitration administering agency, such as the AAA, has significant oversight over the timeframes maintained in its rules and procedures. The AAA has a number of expedited procedures that can be used in smaller cases or agreed upon by parties for larger cases. In addition, the AAA trains its arbitrators to efficiently manage the arbitral process and weigh the requests for discovery against the importance of the requested evidence and the expediency of the case.

However, parties and their counsel also have tremendous control over the expediency of arbitration proceedings throughout each stage of the process. In addition, the old adage, "time is money," continues to ring true in arbitration. The more time arbitration takes, the more money parties may pay in fees to the arbitrator(s) and their counsel.

Parties have many choices (e.g., number of arbitrators, the use of mediation to resolve some issues, adherence to discovery schedules, and the use of videoconference for witness testimony) that positively influence the arbitration process in terms of time and cost.

Parties filing AAA arbitration cases may use the online filing and case management system, AAA WebFile , which provides efficiencies for a number of procedural functions, including online filing, payments and case management. In addition, all parties using the AAA WebFile system have online access to the AAA Arbitration RoadmapSM, an online guide that demonstrates how cases proceed under AAA administration when using the AAA's Commercial Arbitration Rules.

It is critical that the AAA and other ADR providers maintain due process standards for arbitration and all other ADR procedures, as well as preserve arbitration's reputation as a change in forum and not a change in rights. At the same time we all - institutions, neutrals, parties and counsel - should work to ensure that arbitration speed and economy are also maintained.