Creative Arbitration Design and the First Case Conference

AuthorStephen Richard Morrison
chapter seven
Creative Arbitration Design and the
First Case Conference
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If asked, most corporate counsel will explain that they routinely
include arbitration provisions in many of their commercial agree-
ments because they have been told that arbitration is quicker and
cheaper than going to court. The next thing you may hear is that
arbitration, unlike the courtroom, is private. The parties to the
contract do not need to air their dirty laundry in a courtroom
open to the public and media and expose all of their proprietary
processes and documents to scrutiny by their customers and
competitors. Corporate counsel may also point out the benets of
being able to select a decision maker with specialized knowledge.
In the court system, by contrast, parties are stuck with whichever
judge is assigned to the case, regardless of their familiarity with
the nature of the dispute or the industry from which it arises.
It usually stops there, but the most knowledgeable advocates
of arbitration will also identify the most signicant advantage of
arbitration: the ability of the parties working in conjunction with
a skilled and experienced arbitrator to design a procedure most ap-
propriate to the nature of their dispute. The principal advantage of
arbitration is that unlike the system of court-based litigation that
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exists in most jurisdictions, arbitration is exible and allows the
parties to develop ecient and cost-eective practices and pro-
cedures that will provide for a just and fair determination of the
issues with a minimum of unnecessary procedure.
Yet, in practice, few domestic arbitrations fully embrace the
opportunity to custom design a time- and cost-ecient process
suitable to the dispute. Far too many arbitrations fall into the
trap of becoming ersatz litigation, with prehearing process and
procedures modelled on the local court’s rules of civil procedure
and an evidentiary hearing that is eectively a trial conducted in
a boardroom rather than a courtroom. As a result, while the pro-
cess may be private and while the parties may get to consensual-
ly choose a suitable decision maker, the resulting arbitration will
not necessarily achieve the goal of being quicker and less expen-
sive than the state-subsidized court system.
Despite its apparent advantages, many users of arbitration, in-
cluding in-house corporate counsel, are starting to turn away from
this process as the preferred method of dispute resolution, in do-
mestic cases in particular. When not properly managed, arbitration
can take just as long as litigation and can cost even more because
of the need to pay for the arbitrators, the facilities, and a verbatim
reporter, all of which are provided at little or no cost in the court
system. Fortunately, this situation can be remedied. The balance of
this chapter will be devoted to understanding the reasons for the
trend away from arbitration and providing pragmatic solutions.
For arbitration to achieve its potential advantages, a culture shift
is required among counsel, the parties they represent, and, per-
haps most importantly, the arbitrators appointed by them. Every
aspect of the arbitration process must be looked at from the per-
spective of ensuring that the procedure is scrupulously fair to all
parties, saves time and expense, and ensures that the case will be
dealt with in a way that is appropriate to its importance and com-
plexity and the parties’ resources.
Creative Arbitration Design and the First Case Conference
A core issue is the fundamental failure of practitioners to see
arbitration as a completely dierent sort of animal from litiga-
tion. Most counsel who conduct arbitrations are also litigators.
The court rules of practice bring with them the comfort of famili-
arity. Everyone knows what to do and what to do next. Counsel
may complain from time to time about the rules’ unwieldy na-
ture and the extent to which they cost their clients unnecessary
money, but counsel have never seriously contemplated an alterna-
tive. Many arbitrators are quite happy to go along with this, and
the arbitration then becomes litigation by another name, which
captures none of the benets available to the parties, can take just
as long as bringing the case to court, and will cost even more. In
fact, where the arbitration tribunal is made up of three members,
instead of a sole arbitrator, arbitration can actually take just as
long as and cost much more than going to court.
Too often, when compelled by contract or statute to arbitrate,
parties and counsel elect, with the concurrence of their arbitrator,
to conduct the arbitration exactly as if it were a trial, but a trial
conducted in a boardroom instead of a courtroom. One frequent-
ly sees consensual provisions in submission to arbitration agree-
ments that state the arbitration will be conducted in accordance
with the local court’s rules of civil procedure. The parties want
adavits of documents and full rights of discovery. Counsel, per-
haps, fear that they will open themselves to allegations of negli-
gence if they do not insist on these steps. And it is not uncommon
for the parties to advise that they want the standard rules of evi-
dence to apply to the testimony and introduction of documentary
evidence at the hearing itself.
In fairness to the lawyers involved, it is not just them. Run-
ning an arbitration just like a trial may also t better into the com-
fort zone of many arbitrators for all of the same reasons. Especially
if the arbitrator is a retired judge or senior litigation practitioner,
replicating the standard adversarial system in an arbitration room
will feel like the most time-tested and reliable method of resolving
disputes. It is a forum that they are familiar with, and they know
the rules and exactly how to conduct the proceedings.

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