Five Things You Didn’t Know about Arbitration

By Chris Poole

Arbitration is by no means a new option for resolving disputes. Yet, parties and their counsel may not be aware of everything that this method of alternative dispute resolution brings to the table. Here are five things you may not know about arbitration from members of the JAMS arbitration panel.

1. A successful arbitration begins with the initial contract

Parties must set the stage for a successful arbitration while they are working on contractual terms and everyone is getting along.

“If you want to have an efficient, speedy and economical arbitration, start talking when the underlying contracts are being negotiated,” says Judge Fern M. Smith (Ret.), a San Francisco-based JAMS arbitrator. “Arbitrators are controlled in great part by the wording of the arbitration clause in the underlying contract between the disputing parties.”

This wording, says Judge Smith, can cover a variety of issues such as choice of law and venue, the amount of discovery and the procedural or administrative rules that will apply to the arbitration.

“Although the arbitration clause may be modified by stipulation, that’s much harder to accomplish once a dispute has dissolved into a demand,” says Judge Smith.

2. You have options

While it’s preferable to have a good arbitration clause set into the initial contract, parties are not without options if they want to make certain changes after a dispute arises.

“Because arbitration is purely a contractual process, parties can change their pre-dispute arbitration agreement after a dispute arises,” says Richard Chernick, Esq., vice president and managing director of the JAMS Arbitration Practice.

Chernick says parties can:

• Change the institution that will administer the arbitration
• Change the number of arbitrators (from 1 to 3 or from 3 to 1)
• Change the way the arbitrators are appointed (e.g., from strike list to the appointment of a particular person, or from strike list to party appointment of two arbitrators who then appoint the chair)
• Define the scope of discovery or information exchange
• Add or delete a fee-shifting provision

3. All evidence is not equal

Judge Richard A. Levie (Ret.), a JAMS arbitrator based in Washington, D.C., says the “I’ll admit it and decide how much weight to give the evidence” approach favored by some lawyers and probably used by many arbitrators can be a disservice to both the parties and the arbitrator.

The reality is that “Arbitrators generally react to quality of evidence, rather than just quantity,” says Judge Levie.

“While lawyers and parties have the right to expect that arbitrators will read and listen to all evidence, counsel should assess carefully which witnesses and documents are most important and necessary to their case,” says Levie. “Identify and focus on that evidence first and foremost. This approach signals to the Arbitrator the importance of such evidence. Do not hesitate to identify secondary evidence, such as authentication evidence or back-up documentation, as secondary evidence and invite the Arbitrator to treat such evidence ‘for the record’ but not essential to determination of the key claims at issue.”

4. Choose Neutrality When Selecting Arbitrators

Selection of the arbitrator may be the single most important consideration in the arbitration process, and it’s best to select someone who is familiar with the law and has a track record of fairness.

“In a three-arbitrator case, avoid selecting as your choice an arbitrator that you believe will be a strong advocate for your case,” says Judge Smith.  “It may seem like a great idea, but often such a person will simply annoy not only the other party-selected arbitrator, but also the Chair, who generally is neutral. The result may well be that your position will be seen only in a dissent.”

5. You have an option to appeal

Perhaps one of the biggest myths about arbitration is that there is no avenue to appeal an arbitrator’s ruling. This is not the case, and hasn’t been for many years. Many ADR providers offer an appeals process and JAMS created its appellate procedures more than 10 years ago. Keep in mind that not every arbitration is well-suited to an appeal, but incorporation of an appellate process can lessen the risks and provide some peace of mind.

Hopefully these five facts have helped clear up any misconceptions or even provided new insights into how arbitration can be used to resolve disputes.