General Approach to Arbitration
The parties are the masters of their own arbitration process. The arbitrator should be respectful of the parties’ wishes as expressed in their agreement to arbitrate and should comply with any arbitration rules or guidelines incorporated by reference in the parties’ agreement or that are otherwise the subject of party consent. In the absence of party agreement or applicable rules or guidance to the contrary, the following reflects Richard Mattiaccio’s general approach to issues that frequently arise in the course of arbitration.
Demand, Statement of Claim(s) or Counterclaims(s)
Generally speaking, when parties agree to submit disputes to arbitration, they choose a dispute resolution mechanism that is designed and expected to be more time-efficient and more cost-effective than litigation in court.
Accordingly, discovery in domestic arbitration and disclosures, sometimes also referred to as exchange of information in international cases, need to be (a) proportional to the case and (b) consistent with the applicable arbitration rules and the fundamental promise of efficiency inherent in the arbitration process (the “Efficiency Promise”).
In practical terms, the arbitrator who manages the pre-hearing stage of a case has a duty (a) to ask probing questions about the proportionality of proposed pre-hearing discovery or disclosures, and (b) to work with the parties and their counsel to expedite the process without depriving any party of a fair opportunity to present its case.
Electronic communication has become the norm in business dealings, and so “electronic discovery” has become a largely redundant term. However, respect for the Efficiency Promise may result in more limited document discovery than is typical in U.S. federal or state court litigation.
Discovery depositions, in the absence of mutual agreement of the parties, are exceptional in domestic U.S. arbitration. Discovery depositions are virtually unheard of in international arbitration. Unless all parties agree otherwise, discovery depositions should be allowed only for good cause and, in any event, should be limited in number and duration. Even when all parties have agreed to a deposition process, the arbitrator has a duty to probe the proportionality of the proposed deposition program.
In international arbitration, arbitrators are obligated to adopt an approach to disclosure that is consistent with the cultural expectations and practices of international parties unless all parties express a different intent in their arbitration agreement or at the time of the dispute.
Dispositive motions can be useful in limiting the scope of the evidentiary hearing to issues that are (a) truly in dispute and (b) directly related to a claim, defense or counterclaim that is legally cognizable under the governing law. In some circumstances, a motion to dismiss claims or counterclaims or to strike defenses can help the parties to avoid the time and expense involved in presenting evidence that, as a matter of law, cannot help the party seeking to introduce the evidence.
The arbitrator serves an important gatekeeper function in determining whether it would be more likely that a specific dispositive motion (a) would advance the interests of efficiency and fairness or (b) add net time and expense to the determination of the merits of a case.
In practical terms, attorneys seeking to make dispositive motions should be required to seek permission to file such motions by means of a short letter setting forth the factual and legal basis for the proposed motion. Counsel opposing any such motion should be afforded an opportunity to submit a short letter setting forth reasons for denying permission to make the motion. In most cases, the request for permission to file a dispositive motion can be decided on the basis of this exchange of letters.
If an arbitrator identifies a legal issue that may have a material impact on the decision of the dispute, he or she should ask questions that prompt the parties to address those issues. The arbitrator should not conduct independent legal research except with the authorization of the parties. The arbitrator should allow all parties an opportunity to weigh in on issues that concern the arbitrator.
Scheduling of Hearings
Evidentiary hearings are not easily scheduled in most cases. Once they are scheduled, they should not be postponed except for good cause shown. The arbitrator(s) should set a realistic schedule in an early procedural order that (a) sets forth all the important preparatory steps in detail and (b) sets hearing dates that are attainable and to which all parties, any other key witnesses and counsel make a firm commitment.
Fact Witness Testimony
In domestic U.S. arbitration, oral direct testimony remains common practice. In some circumstances, direct testimony by written statement can be a useful device to shorten the number of days required for hearing and therefore save the parties time and expense. Witness statements can also serve as an efficient, effective surrogate for discovery depositions. However, when the statement is not drafted in the witness’ own voice, or contains legal argument, or otherwise reads like a memorandum of law drafted by counsel, it tends not to be effective as direct testimony.
When witness statements are used, particularly in domestic U.S. arbitration the witness should be afforded an opportunity to present at least an overview of his or her testimony orally at the hearing before the witness submits to cross examination.
In international arbitration, written direct witness statements are the norm, and this approach should be respected unless the parties agree to some other procedure.
The chair or sole arbitrator has the duty (a) to allow a reasonable, proportional opportunity for cross-examination, (b) to limit cross-examination to matters that are relevant to the merits or highly probative of the credibility of the witness, and (c) to ensure civility in this and in all phases of the case.
Closing Arguments / Post-Hearing Submissions
Some cases are best served by closing arguments, others by post-hearing briefs, and sometimes in substantial cases by some combination of the two procedures. Closing arguments can be helpful to the arbitrator and the parties as an opportunity for a question-and-answer session. In view of the fact that arbitrators become acquainted with the parties and their counsel by the conclusion of the evidentiary hearing, telephone or video conferencing is a viable cost-saving option for closing arguments.
Assistant or Tribunal Secretary
Generally, an arbitrator should do his or her own work. In some circumstances, with disclosure and consent of the parties, an arbitrator may obtain assistance from another professional who commits to the confidentiality obligations of the arbitrator and assists with the more time-intensive or repetitive work. Even in those circumstances, however, the arbitrator should deliberate on the merits and draft the award only with fellow arbitrators, if any, in the case.
Mediation or Settlement Negotiations
An arbitrator may encourage the parties to consider going to mediation or conducting settlement discussions but should not propose settlement terms or offer to become involved in settlement discussions. If the parties ask an arbitrator to mediate the dispute, the arbitrator should do so only following (a) disclosure of the major risks and (b) receipt of written consent of all the parties and their counsel, and, even then, only if (c) the arbitrator believes he can remain neutral and independent as an arbitrator if the mediation should be unsuccessful.
Form of Award
A reasoned award should be no longer than necessary (a) to comply with the applicable arbitration rules and (b) to explain to the parties the factual and legal reasoning underlying the award.