The AAA recently conducted a study on how parties and advocates can take steps to increase efficiency and decrease expenditures associated with arbitration. The institution surveyed over 400 arbitrators who had issued awards in large and complex cases, with at least $1 million in claims or counterclaims.
Questions focused on:
Leading causes of case escalation
Use of motion practice and discovery
Ways to encourage economy and efficiency of process
No one will be surprised that the #1 cause of protracted arbitration delay and cost, from the arbitrator's perspective, was discovery; 39% of arbitrators cited discovery as the leading cause of case escalation.
Interestingly, discovery disputes occurred in approximately 75% of cases. But discovery was directly addressed in less than 10% of arbitration clauses.
The temptation to craft highly specific, lengthy arbitration discovery requirements is increasingly high. However, institutional rules and clause drafting best practices offer tremendous help in creating clauses that will be enforceable and not an invitation to litigation over the clause, which no one wants. The AAA survey also provide guidance in this regard (see link below).
After discovery, motion practice was the #2 contributor to case delays and an increase in costs (36% of responses listed motion practice as the biggest contributor to inefficiency).
Of the cases surveyed, 85% included motion practice - mostly relating to discovery or dispositive motions. Similar to the treatment of discovery, most clauses in the arbitrations surveyed by the AAA made no mention of motion practice.
Motion practice can be an effective tool in streamlining arbitration and clarifying issues. But, as evidenced here, it also has the potential derail proceedings to the detriment of efficiency and economy.
Best Practice Suggestions
The AAA survey includes a series of suggestions for promoting more efficient arbitration processes, including:
Parties should take care to leverage arbitration clauses that suit their needs, whether placing time limits on the discovery process or other constrictions on the process.
Arbitrators, in turn, should address these issues at the outset with parties and outline process requirements in her scheduling order.
As most parties seem to defer to institutional rules, rather than craft their own discovery and motion practice requirements, arbitrators should take steps to curtail processes that take the case off track.
The survey also found that cooperation between opposing parties and counsel created an environment that often allowed for efficient processes.
To read the survey results in full, click here.