Some lament that arbitration has become too much like litigationprotracted and expensive. This article suggests a dozen ways that corporate counsel can keep domestic arbitration from evolving into its evil twin.
1. A Little Planning Goes a Long Way
All too often an arbitration clause, removed from the critical path of negotiations, merely states that disputes will be arbitrated pursuant to institutional rules vesting the arbitrator with unbridled discretion regarding extent of discovery and schedule. To avoid excessive discovery, ancillary court skirmishes, and a lengthy path to final judgment, parties should seize control of their destiny before the ink dries on the underlying contract. At this stage, they have power to circumscribe the future.
A one-size-fits-all arbitration clause, of course, may be more appropriate for some disputes than others. If an arbitration arises that would benefit from loosening restrictions discussed below, litigants can attempt to do so by agreement. Or, to build in more flexibility, the contracting parties could insert an escape provision. . . except when the arbitrator, in the exercise of discretion, directs otherwise. Such discretion shall be sparingly exercised so as to promote speed and efficiency.
Or, the contract could provide for application of expedited, streamlined rules in cases where the amount in controversy falls below a specified amount. The American Arbitration Associations (AAA) Commercial Arbitration Rules provide for expedited procedures in matters involving less than $75,000, exclusive of interest and arbitration fees/costs. See Rule R-1 (b) and Rules E-1 through E-10 at adr.org. CPR also publishes optional Fast Track Arbitration Rules.
2. Dont Be a Dope, Clarify the Scope
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