Harnessing Innovation to Improve the Quality of Arbitrator Decision-Making

A neutral’s perspective on the evolution of resolving construction disputes

Hon. Nancy Wieben Stock (Ret.)
Hon. Nancy Wieben Stock (Ret.)
JAMS Mediator, Arbitrator, Referee/Special Master, Neutral Evaluator, Judge Pro Tem

Published January 23, 2023

For several years, the shuttering effects of a global pandemic have severely hampered the ability of arbitrators and advocates to use direct techniques to try complex commercial arbitration cases. Forced closures, tempered by the need to timely resolve construction disputes, fostered a survivor’s mentality within that industry in particular. As a result, arbitrators, attorneys and clients have collaborated in spectacular fashion, under particularly challenging circumstances, to achieve the goal of timely and complete resolution of bet-the-company conflicts.

As we emerge from the stresses and limitations of the pandemic, it is important that we, as arbitrators, do not take our foot off the pedal. The resolution of highly complex business disputes requires fortitude and innovation. As Albert Einstein said, “Logic will get you from A to B. Imagination will take you everywhere.” Whether arbitration hearings take place virtually or in person, we owe it to our clients to continue to adapt the most advanced techniques in evidence-taking and decision-making.

Global settlement is the ultimate goal in most construction disputes. But there are times when settlement cannot be reached. Sometimes a binding decision, after full evidence presentation, serves as a bellwether for similar disputes. At a minimum, an arbitration award will educate parties on future business practices. Because the results are so important, when complex construction disputes, especially those with engineering features, are taken to arbitration hearing, it is imperative that every such proceeding be conducted to enhance arbitrator comprehension and decision-making.

In my combined 32 years adjudicating and arbitrating cases, I have learned that the job of an arbitrator is to accurately comprehend the law and the facts to address each remedy sought and every defense. This “learning” of the case can be facilitated by a presentation that is cogent and focused. It also helps if the “teaching” of the case allows the arbitrator to build the case piece by piece as each segment is presented. This is not unlike a construction project, from soils and foundation to framing and finish.

Use an “arbitrator’s scorecard.” In a recent arbitration concerning a multiunit, single family residential development, the evidence included 198 claimed defect areas, implicating six or seven categories of expert analysis. To catalog the evidence received in each defect area, counsel agreed to the use of an electronic “arbitrator’s scorecard.” It was agreed the scorecard could be received as evidence. Every defect was assigned a number by type and subtype. The claimant’s and respondent’s proposed hard costs appeared in side-by-side columns. The next column denoted the arbitrator’s decision or whether the parties or experts had agreed on a particular finding mid-hearing. (This happened frequently.) A final column contained the arbitrator’s contemporaneous notes. Placing them adjacent to the specific defect group was superior to the usual method making handwritten notes. If opposing experts testified weeks apart, the arbitrator could add their notes regarding both opinions in the same box on the scorecard. It was helpful to be able to enter immediate, tentative conclusions on some of the simpler defect areas on the scorecard as soon as the second expert finished testifying. The parties stipulated that the scorecard could be prepopulated with notes about the partial resolution of certain defects. As additional settlements on certain defects occurred during the hearing, they were also entered on the scorecard.

Deliver the case on a silver platter. In a recent arbitration, I convened 32 daily participants in the hearing room. The issue was responsibility for failed deep foundation footings during construction of a high-rise commercial building located in a seismic region. Counsel and I collaborated on innovations to ensure that the highly technical evidence and competing insurance provisions were clearly presented. These techniques served to simplify the evidence and facilitated arbitrator comprehension of technical nuances.

(a) Opening statements were presented 30 days before the evidence commenced. This allowed counsel to make final adjustments and make further progress on a robust stipulation of undisputed facts and law. This allowed us to reserve precious hearing time for issues actually in dispute.

(b) PowerPoint presentations, with embedded multimedia re-enactments and color-coded renderings were admitted into evidence. Although they contained matter not normally considered evidence in a courtroom, everyone agreed that the Arbitrator could give such weight as was warranted to each component of these presentations. Confidence in the arbitrator’s ability to perform this weighing allowed for the introduction of visually appealing and creative treatment of dense technical concepts.

(c) The parties submitted a chronology of critical events, annotated with exhibit numbers. Litigants should not overlook the importance of a tightly drawn factual chronology. In construction disputes, the timing of an activity or response thereto can be critical to the arbitrator’s decision. It is particularly helpful when the exhibits are linked to in the chronology. The inclusion of searchable, extractable text in all PDF filings and exhibits ensures the arbitrator need not access a second device or file.

(d) Having experts testify consecutively, and in each other’s presence, allows the common subject of their testimony to be thoroughly “roundtabled” and provides true witness accountability. Some arbitrators prefer a debate format, called “hot-tubbing.” A handwritten side-by-side balance sheet, contrasting the key elements of opposing opinions also serves as a handy checkoff for the arbitrator.

(e) Even though counsel reserved the opportunity for written closing briefs, at the end of the evidence, we set aside time for a live interaction with the arbitrator, where I posed questions and discussed with counsel the key issues that should be included in their briefs. This type of session is critical. Without it, counsel have no idea where the information gaps lie. It also allows the arbitrator to share which of the additional tools referenced in this article should be included in their briefs, if they have not already been provided.

Introduce innovative techniques. For those accustomed to the strict procedures demanded in state and federal courtrooms, the more relaxed and collaborative arbitration environment should inspire innovative solutions. Rule 22(a) of the JAMS Construction Arbitration Rules and Procedures allows the arbitrator latitude in conducting the arbitration hearing and to “vary [hearing] procedures if it is determined to be reasonable and appropriate to do so.” International arbitration rules follow suit.[1] JAMS Rule 22(b) states, “The Arbitrator shall determine the order of proof ….” Rule 22(d) allows the Arbitrator to, “consider evidence that he or she finds relevant and material to the dispute, giving the evidence such weight as is appropriate.” “Strict conformity to the rules of evidence is not required ….” (Id.) International arbitration rules follow suit. These relaxed rules are appropriate for contractual arbitration, where long before a dispute arises, parties have already agreed to cost-saving and expedited resolution. Arbitration rules create the perfect environment for innovation, which, when executed effectively, delivers the high-quality dispute resolution that the clients contract for in their arbitration agreements.

It did not have to take a global pandemic to force counsel into forward-thinking trial techniques. These ideas just make sense. After all the effort has been expended on evidence presentation, counsel must still ensure that the arbitrator comprehends and appreciates each piece of evidence. At the close of the evidence, the arbitrator or tripartite tribunal may have only 30 days, after submission of closing briefs, to write the award. (See, e.g., JAMS Rule 24.) Ideally, the case will have been presented to enable the arbitrator to craft a decision tree by the close of the evidence so that the passage of time will not dampen the arbitrator’s grasp of the issues. This ideal result will be more likely if the parties use collaborative and innovative evidentiary approaches suited to the unique needs of a dispute, thereby enhancing the arbitrator’s ability to write a well-reasoned, timely decision and issue a correct award.

[1] The International Court of Arbitration (ICC) encourages the use of various case management techniques to streamline and simply arbitration hearings. (See ICC Arbitration Rules Appendix IV: Case Management Techniques.) The rules of the United Nations Commission on International Trade Law (UNCITRAL) state, “[t]he arbitral tribunal may conduct the arbitration in such manner as it considers appropriate.” “The arbitral tribunal, in exercising its discretion, shall conduct the proceedings so as to avoid unnecessary delay and expense and to provide a fair and efficient process for resolving the parties’ dispute” (UNCITRAL, Section III. Arbitral proceedings, General provisions, Article 17.1).

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