Streamlining the Process - New Rules Increase Appeal of Arbitration

Sierra J. Spitzer, Partner
Schwartz, Semerdjian, Ballard & Cauley, LLP
Published:  03.01.2014

As any litigation attorney can attest, the discovery process in civil litigation matters can often times be grueling, time-consuming and feel like more trouble than it is worth.  Now, in the wake of substantial court cut-backs and the ensuing overloaded dockets and difficulty getting timely motion hearing dates, this bothersome aspect of discovery has only been further compounded.  As a result, parties are looking to find alternative options for dispute resolution that provide a more streamlined and simplified approach to discovery and case administration overall.  Arbitration associations like the American Arbitration Association (“AAA”) are eager to step up and into the role as the preferred method for dispute resolution.  However, in order for this to happen, some changes needed to occur, as, over time, the distinction between court litigation and arbitration has faded and arbitration has become just as saddled down with delay, burden and expense. Accordingly, AAA and other associations are making moves to streamline their process and make arbitration an appealing alternative to traditional litigation.    
In particular, the American Arbitration Association (“AAA”) recently issued revisions to its Commercial Arbitration Rules, [which (unless otherwise agreed to by the parties) will apply to any AAA-administered arbitration that is filed on or after October 1, 2013], which allow for the arbitrator to more efficiently manage discovery and the case as a whole.  With the increasing popularity of arbitration provisions in employment relationships and in contractual agreements generally, many of these changes to discovery and the arbitration process overall are significant and noteworthy.  Some of the pertinent new revisions are outlined below:  

Dispositive Motions
Under New Rule 33, the arbitrator has the authority to hear and decide dispositive motions “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.”
The AAA rules were previously silent on the question of whether the arbitrator had the authority to hear and rule on dispositive issues in the case.  Naturally, this uncertainty regarding the scope of authority of the arbitrator was a major impediment to efficient case resolution because it created a threshold level dispute that was not even related to the merits of the claims at issue.  The new rule eliminates all doubt and gives the arbitrator the absolute ability to grant dispositive relief upon a showing of insufficient evidence of the required elements of a claim or in cases where there is an absolute legal defense.  Additionally, it allows for the arbitrator to make a determination as to the arbitrability of the claim itself.  

With this change, AAA follows suit with JAMS and other private arbitration associations who already had rules in place granting arbitrators this type of summary disposition authority.  

Emergency Relief
The new rules also give arbitrators a great deal more power when it comes to requests for emergency relief.  Previously, emergency measures were only available if the arbitration agreement specifically provided for them or the parties both agreed.  Now, the rule provides just the opposite, allowing arbitrators to provide emergency measures unless expressly prohibited to do so under the parties’ agreement. 


Consistent with the direction of the courts, the new Rule 9 is highly encouraging of mediation and provides that in all cases where the claim exceeds $75,000, the parties “shall” mediate the dispute.  The parties do have the option to “opt out” of mediation, but the implementation of this rule makes it fairly clear that a decision to forgo ADR is disfavored and should not be made lightly.  
Due to its ill-famed reputation in court litigation, discovery was a major issue targeted by the AAA in making changes to its Rules.  To draw a distinction between discovery in court litigation and arbitration, the AAA made moves to relieve some of the burden and expense generally associated with discovery by streamlining and simplifying the discovery process in the arbitration setting.

For example, New Rule 21 calls for the arbitrator to schedule an initial hearing with the parties “as soon as practicable after the arbitrator has been appointed.”  Thus, rather than having to wait anywhere from 3-8 months for a Case Management Conference before the court, this Rule allows for the arbitrator to immediately get the ball rolling on the case and to get a sense of the claims, parties and issues that will need to be addressed.  Specifically, at the preliminary hearing, the parties and the arbitrator also are to discuss, among other things, whether all necessary and appropriate parties are included in the arbitration; whether a party will seek a more detailed statement of claims, counterclaims, or defenses; and whether there are any threshold or dispositive issues that can be decided without considering the entire case. 

New Rule 22 provides the arbitrator with some management authority over discovery.  Similar to the federal court procedure, the parties are required to produce any documents on which they intend to rely.  Further, the arbitrator can require the parties to respond to document requests that are: (i) not otherwise readily available to the party seeking the documents, (ii) reasonably believed by the party seeking the documents to exist, and (iii) relevant and material to the outcome of a disputed issue.  Allowing the arbitrator some discretion over the discovery process helps keep the parties in check with regard to the number and quality of the discovery demands made and also helps ensure that all pertinent material is exchanged.  Rule 22 also specifically addresses electronically stored information and allows for the arbitrator to evaluate and make determinations with respect to the reasonable search parameters for same and to set limitations on production based on an evaluation of benefit versus burden.   

Finally, New Rule 58 gives the arbitrator enforcement power, allowing for imposition of sanctions on parties who fail to comply with the rules or an order by the arbitrator.  These sanctions can include limiting a party’s participation in the arbitration or an adverse determination of an issue or issues.  The arbitrator is not permitted, however, to enter a default award as a sanction.  This added power to “drop the hammer” on parties engaging in abusive or improper conduct, can prove helpful to the mediator in efficiently managing and moving along the discovery process.

Overall, the revisions to the AAA rules and practices appear to be a step in the right direction when it comes to improving efficiency in case management and discovery in the arbitration arena.  With any luck, the court litigation practice will soon follow suit.