“Commercial Arbitration 2019” – New York State Bar Association Sponsors a Full-Day Seminar for the Neutrals
Posted on Categories Arbitration, Arbitrators, Court Decisions, Mediation, Non-Securities Arbitration, SeminarTags , , ,

Held at Fordham Law School's Skadden Auditorium on Monday, March 25, this program, the full name of which was “Commercial Arbitration 2019: What Parties and Counsel Have a Right to Expect and Arbitration Should be Delivering: Arbitration at its Best,” differed in a number of ways from the programs we generally cover.

Most notably, this program was aimed at professional neutrals, not practitioners. While sponsored by the NYSBA, the program was produced, carefully and tightly, by the two co-moderators, Jeffrey Zaino, Vice President of the Commercial Division of the AAA in New York, and Charles Moxley, MoxleyADR, LLC, an experienced neutral who trains arbitrators and practices widely as an arbitrator and mediator.

In a welcoming speech, Mr. Moxley referred to the advent of the “muscular arbitrator,” a concept that developed from past years’ programs. During today’s program, he said, we will be taking stock to see how well we are doing. This concept of control and direction from a strong neutral underlay many of the concepts of economy and efficiency discussed during the day’s sessions. While many practitioners might scoff, the theme throughout the day hammered on saving time and reducing costs. If arbitration is to maintain its edge over litigation, these objectives are key ingredients to success.

The all-day program featured 28 speakers, who brought a plethora of experience and diverse perspectives to the process -- how to improve it and how to handle complex procedural matters. Below, we present just a smattering of the many takeaways from this intense and provocative Conference.

Top Ten Session

Co-moderator Jeff Zaino led a quick-paced canvassing of forum leaders, arbitrators and practitioners for their top tips. On diversity, we heard that variety adds spice to the process and contributes to better panel decisions. Marrying with the diversity theme was the advice of an arbitrator selection consultant (ed: did you know that specialty existed?) to use three arbitrators versus one when feasible, to bring to bear on the problem their varied experience and background. Mediation and arbitration, simplistically viewed as separate and distinct processes by many, are becoming more integrated, with arb-med growing in use. Michael Young, a JAMS Arbitrator, advised counsel to “trust arbitrators” and provide a platter of damage theories, offering mitigation analyses that will provide choices, in the event of liability, for the arbitrator to fit to the facts. Arbitrator selection was one litigator’s focus. Always choose integrity over partiality, he counseled. Due diligence is uppermost in making one’s selections; tap every resource to learn about your arbitrators.

Forum Statistics

While a half dozen or more ADR forums (including FINRA) were represented on the dais, most of the statistics related to AAA commercial cases. Some interesting data points: 65% of commercial arbitrations settle; 85% of employment arbitrations settle. Also, 20% of the arbitrator lists sent to parties in commercial arbitrations are diverse. Finally, the cost of using three arbitrators instead of one is not three times more; statistically, it’s proven to be five times more. The default choice at AAA is one arbitrator up to $1 million in dispute (ed: more AAA facts and figures appeared in one of our Short Briefs in SAA 2019-14 (Apr. 10)). 

Resources for Parties

Available only to parties, AAA’s Arbitrator Search Platform (“ASP”) allows a review of the full directory of available commercial arbitrators. AAA also offers a service, Arbitrator Select, that assists parties who want to form their own panel. The College of E-Neutral and Sedona Conference provide Internet-available guidance on ESI (electronically stored information) discovery. For controlling discovery, JAMS’ Website features a set of discovery protocols and helpful related materials. ClauseBuilder, available on the ICDR (“International ­­­­Centre of Dispute Resolution”) Website, aids in drafting pre-dispute arbitration agreements with a primer on clause design.

New Issues and Challenges

Arbitrator Research: At FINRA, staff advise arbitrators not to do any independent research, but rather to request briefing or clarification from the parties. That’s not the case at all forums. Particularly in more complex cases, an arbitrator is not so restricted, but only advised to disclose if they do any outside research on the facts or the law (ed: this comports with Canon VI(B) of the Code of Ethics for Arbitrators in Commercial Disputes). In fact, some veteran arbitrators will make provision for the hiring of assistants to perform research, arguing that it helps to control costs. Due process concerns counsel allowing the parties an opportunity to address those issues an arbitrator chooses to research, one panelist added. One should expect the arbitrator to disclose if she does research on facts and law, another joined.

Third-party funders (“TPF”) are becoming more prevalent in large commercial cases today. One lawyer among the faculty recently jumped from a high-level legal position to a TPF. Some large and complex cases, often those in the international realm, are just too expensive to pursue without spreading risk or obtaining financing. TPFs also represent an asset allocation option, wherein businesses will seek financing simply to enhance cash flow and avoid constricting investment choices. Parties who use TPFs are trending more towards disclosure, in part, because their neutrals may have TPF conflicts that need to be aired and resolved. Disclosure, though, is limited generally to just names, not the details of the TPF arrangement.

Class Action Waivers: Be careful what you ask for..., the saying goes. The prevalence of CAWs in the employment sector is presenting arbitrators and forums with new challenges. One panelist discussed the Uber case in California, where once-rival law firms representing “employees” (the Uber drivers) have reacted to individual arbitration by banding together and submitting a tidal wave of thousands of claims to arbitration, flooding the system and confronting Uber with the prospect of tens of millions in filing fees. How those cases will be processed -- through consolidation, sampling, or otherwise -- represents the next big question for the forum and its neutrals.

(ed: This was an excellent program! We especially liked the emphasis on arbitrator “best practices.” It was frankly invigorating to attend a program where the emphasis fixed on efficiency and streamlining -- on realizing arbitration’s benefits of cost, speed and finality.)

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