Beyond the Discretion of the Arbitrator (Arias US Quarterly)
April 3, 2009
This article answers many questions, one being: Is arbitration capable of providing parties with adequate discovery to investigate and prepare their case without opening the floodgates of unbridled court style discovery?
The concern of stakeholders in insurance and reinsurance arbitration about the morphing of arbitration into full-blown litigation with unbridled discovery seems to be growing. The fact that it is largely self-inflicted (we certainly have the ability to influence if not control the process) is cold comfort. Insurers and reinsurers alike feel trapped between the Scylla of open-ended expense and delay and the Charybdis of losing a case because of evidence not unearthed.
Is arbitration capable of providing parties with adequate discovery to investigate and prepare their case without opening the floodgates of unbridled court style discovery?
The answer is emphatically "Yes!" Arbitration provides both a process for achieving this and a standard whereby it may be achieved.
In-house counsel expect ingenuity and flexibility from arbitrators in administering cases in such a way as to achieve the arbitration goals of expedition and economy while providing a fair process. Unless arbitrators are able to satisfy this need, arbitration will become the same dinosaur that litigation has become.
FOR ACHIEVING EXPEDITIOUS DISCOVERY
Is there a standard that determines the appropriate scope of discovery in insurance, reinsurance and other commercial arbitrations, a principled basis for the arbitrators' determination as to what discovery should or should not be permitted? Over and again, in discussions of the topic, we hear and read that "Discovery is in the discretion of the arbitrator," as if that were an answer. Virtually never does the discussion go to the next level: On what basis are arbitrators supposed to - do they - exercise this discretion? The answer, in my view, is that there is such a standard. Based on my experience as an arbitrator in many cases over a 30 year period and review of applicable law and of the guidelines and rules of organizations such as ARIAS· US, the Reinsurance Association of America (RAA), the Task Force on Insurance and Reinsurance Disputes, the American Arbitration Association (AAA), JAMS, the International Institute for Conflict Prevention and Resolution (CPR), and others, there is a well established and broadly understood standard for discovery in arbitration, a standard that a party in an arbitration may confidently present to arbitrators as being the governing standard by which they should be guided.
CPR in its Rules recognizes the same standard of balancing the "needs" of the parties and the interests of expedition and economy in arbitration, stating that, "The Tribunal may require and facilitate such discovery as it shall determine is appropriate in the circumstances, taking into account the needs of the parties and the desirability of making discovery expeditious and cost-effective."
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Litigator, arbitrator, and mediator, specializing In complex insurance industry and other disputes