Practice Points: Strategic Arbitration Considerations for Advocates
A Tuesday, July 30, CPR presentation provided practical advice for getting the most out of arbitration.
At the online event hosted by CPR Dispute Resolution Services, the speakers–independent arbitrators and members of CPR Panel of Distinguished Neutrals John Burritt McArthur, of Berkeley, Calif., and Gary Benton, of Palo Alto, Calif., and Carmela Romeo, a partner in Arnold & Porter’s New York office--discussed the life cycle of an arbitration proceeding and how advocates can leverage each stage of the process to maximize its value.
The panel began with the importance of choosing the right decision-maker. The speakers stressed the importance of selecting someone who understands the arbitration process, has expertise in the subject matter at hand, and in panel arbitrations, individuals who are known to work collegially with colleagues.
Romeo noted that counsel can sometimes focus too heavily on picking former judges, which can have the effect of causing counsel to approach arbitration in an adversarial manner and make it potentially a less flexible process, one more like traditional court litigation. The number of arbitrators is also important. Advocates should weigh the cost of hiring arbitrators instead of just one against the need to have a well-rounded, truly neutral panel.
The speakers agreed on the important difference between privacy and confidentiality in an arbitration proceeding. Benton stated,
It’s highly recommended that parties agree up front to a confidentiality agreement, even in non-U.S. jurisdictions where party confidentiality is considered the norm. That agreement might need to include some higher level of confidentiality for proprietary information, [and] it would almost certainly want to include a procedure for inadvertently produced privileged documents-a claw-back arrangement, as it’s called—and as well it would be advisable for parties to have a provision for providing notice to the other side if the other side received a subpoena to produce various documents.
While many arbitration rules, such as those from the American Arbitration Association, JAMS Inc, and the International Chamber of Commerce, impose confidentiality obligations on the arbitrators and institutions, those obligations do not impose confidentiality on the parties.
Only CPR’s rules bind the parties expressly, but even they do not address other important terms, including return of inadvertently produced privileged documents, notice to all parties if a third party asks a party to produce arbitration information, higher levels of confidentiality for particularly sensitive information, and destruction of documents after an arbitration's closing.
Parties concerned about confidentiality are much better off drafting a separate confidentiality agreement to supplement the rules.
When it comes to getting prepared for the preliminary hearing, arbitrators should keep in mind the benefits of arbitration. As Romeo stated,
The great benefit of arbitration is that it’s a flexible process, and I think there’s still a lot of counsel who enter the arbitration stage thinking like they’re in court. It really benefits counsel to think outside the box, which is agreeing on procedures with the other side where possible and presenting it to your arbitrators–that will help provide for an efficient process to resolution.
The speakers urged parties to have more input in fashioning their arbitrations. The panelists urged parties to consider arbitration to determine a limited scope of information exchange and voluntary productions at or near the start of a proceeding. The parties also should try to agree on as much of the schedule as possible--including the date and length of the hearing--and present a proposal to the arbitrators before the initial prehearing conference. The parties should make room in the schedule for mediation or other settlement processes.
Benton commented on the advantage of raising the topic of settlement upfront, before the matter gets underway, to assist the parties in putting the topic on the table, although arbitrators would not typically be involved in any such discussions. Another consideration to keep proceedings moving smoothly is to set a deadline for amendments, including defenses.
It is important for advocates to use case management staff as a resource. CPR President and Chief Executive Officer Serena Lee, urged that counsel view case managers as partners. Mia Levi, Vice President of CPR Dispute Resolution Services, noted that case managers have valuable institutional experience in working through the arbitration process, and can help the parties throughout the process.
Levi also noted that under CPR rules, case managers can be used to facilitate negotiations when a party wants to talk about settlement but does not want to make the first overture.
Arbitration is designed to provide much more speedy procedures. If parties can agree on a short schedule, it is generally more beneficial to everyone. Advocates should talk to the other side about mutually limiting information requests in the interest of getting to the merits hearing sooner.
Dispositive motions are useful tools to expedite arbitrations as they often are in court cases, too. Such motions can resolve disputes that truly turn on questions of law. Carmela Romeo noted that dispositive motions can also be useful as a way of having the parties develop their side of the matter early on, including as to facts and hearing themes.
In pre-hearing briefs, simple is better. “Arbitrators are not likely to think it’s a sign of weakness if you drop a claim or defense,” noted John McArthur, adding, “Don’t be reluctant to shave things and focus, even in your pre-hearing brief. It really helps to have a tight focus during the merits hearing and it simplify briefing at the post-hearing stage, too.”
When discussing the merits hearing, Gary Benton noted the importance of “arbitrating expeditiously [and] understanding that you’re not in a court hearing. You’re not speaking to a jury, you’re talking to an experienced arbitrator or panel of arbitrators that has probably seen cases like this time and time again. Don’t waste time objecting unless it’s critical.”
Post-hearing briefs can be useful to lay out a case and address surprise admissions and other testimony that first arose in the merits hearing. McArthur noted that advocates should make sure to have their post-hearing briefs detail the final numbers and full basis for the parties damages models.
If arbitrator questions indicate that the panel members may adjust a party's model, post-hearing briefing must furnish them cites to the information to enable these adjustments.
Post-hearing briefs can be especially useful for complex cases, Benton noted, adding that having consecutive briefing is more useful than a single round of concurrent briefing, as it allows the parties to respond to each other rather than having them argue over each other.
Finally, the speakers discussed vacatur. There is so much deference to arbitrators that efforts to overturn awards rarely succeed. The vast majority of awards are not appealed. Moreover, even the most frequent and successful challenge to awards, that for exceeding powers, succeeds less than 20% of the time.
The U.S. Supreme Court has declared that agreements on full judicial review of awards are not enforceable when arbitrations fall under the Federal Arbitration Act, and some states take the same position under their statutes.
But each major arbitration provider offers its own appeal process for challenging the merits on similar grounds to judicial review but before a panel of arbitrators. The catch is that the parties must agree separately to activate this right to appeal; just agreeing on a provider’s general rules does not include the right to appeal.
Parties wanting such appeals therefore are wise to seek agreement with the other side before the arbitration begins. Once an award is issued, the winning party will not agree to add an appeal.
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The author, who will be a second-year student this fall at Brooklyn Law School in New York, is a 2025 CPR Institute Summer intern.
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