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Making Arbitration a Better ADR Tool (Web)

GATHER parties and attorneys to reflect on arbitration processes, and you won’t run across post-award raves and hosannas too often.

You will hear about disorganized tribunals and prolonged timelines. You’ll likely get an anecdote about ridiculous discovery requests, and even more ridiculous discovery orders. And you won’t wait long to hear about clueless decisions and – still – an occasional runaway award.

International commercial disputants have gravitated to arbitration for decades – make that centuries – because it’s necessary to keep business going, and away from potential local prejudices.

But it’s an inevitability rather than an embrace. The invasion of litigation-like practices, in retrospect, shouldn’t be a surprise.

Parties now say it’s time for a return to the lowercost alternative that they originally sought, and away from what arbitration has become – and what they now detest.

At its New York annual meeting last January, and at a spring meeting in May in Vienna, the International Institute for Conflict Prevention and Resolution (the CPR Institute), and members from leading global corporations and law firms, aired many of the troublesome signs. Some are extreme. U.S. and European General Electric Co. attorneys, for example, reported that they avoid arbitration wherever possible, opting for mediation.

Fortunately, practitioners’ dialogue at the CPR Meetings moved beyond the negativity to reveal why arbitration not only won’t go away, but could get much better. Participants said they are pushing for – and getting – much tougher case management techniques, like discovery limits and tighter deadlines, by providers and tribunals.

Others noted the world’s major arbitration providers, as well as private initiatives, are working to make arbitration more transparent by better circulating expanded arbitrators’ histories.

Improvement efforts are underway practice-wide. CPR representatives, for example, discussed a late 2007 revision to the organization’s two-decades-old arbitration rules that now provide interim relief measures.

There is progress elsewhere, too. The March U.S. Supreme Court decision in Hall Street Associates v. Mattel provides domestic arbitration assurance, despite calling into question the vitality of a long-running case-law review standard. The opinion bars parties from contracting for additional judicial review of arbitration awards under the Federal Arbitration Act.

Still, as a clause-drafting refinement, Hall Street serves as the equivalent of the practitioners’ efforts to ensure a more stable process and outcome. The opinion was particularly timely in light of renewed Congressional moves to restrict arbitration in consumer and employment matters due to fairness concerns.

The opinion also encourages use of the comparatively new arbitration appeals processes – seemingly a much better option for party ADR control than the court review provisions now banned in FAA matters under Hall Street.

It adds up to a universal awareness of the process ills, which have been met with efforts by individuals and institutions worldwide, from the micro to the macro, at making arbitration work better. Awards are enforceable worldwide, said one CPR Annual Meeting panelist, and that means that the process will not disappear.

Neither will the complaints, at least for the immediate future. But their dissatisfaction has people working to ensure that arbitration is an essential dispute resolution tool – not one of default or resignation, but a process returned to its roots as a less-burdensome, and less costly, litigation alternative.

By: Russ Bleemer
Editor, Alternatives