February, 20th, 2024
Recently, WHIPGROUP engaged in an arbitration that included a five day hearing in the City. Here are some thoughts about why arbitration is different (not clearly better or worse) than litigation.
The AAA arbitral venue, which is located a block from Grand Central Station, is well appointed. Climate control and audiovisual equipment are adequate. The hearing and breakout rooms have comfortable chairs.
Daily room rental is about $900 for the hearing room and $350 for each breakout room.
Lunch, sodas, and snacks are complimentary.
A tribunal of three arbiters heard our matter. They all were experienced commercial litigators. At least one was an accomplished patent attorney. Their hourly rates for arbitration were in the neighborhood of $500.
Plenty of insightful questions from the tribunal. Loose control of attorney questioning. On some occasions it felt like counsel were being allowed to testify. Freewheeling opening statements, including misuse of the AV equipment to present 147+ slides in 2.5 hours.
Leave of the tribunal was required to file any motion. Evidentiary rules were very permissive; admission of evidence was the default and authentication of documentary evidence was presumed. The arbiters charged hourly to review motions. These factors quashed the pre-trial motions practice that is familiar to litigators.
The tribunal required pre-hearing and post-hearing briefs on matters of law and fact (principally law).
The tribunal had limited authority to compel or to manage discovery. Production was essentially voluntary. No interrogatories or requests to admit. Arbitral subpoenas are a possibility – two were issued in our matter – but are difficult to enforce. Neither of the issued subpoenas seemed to be used. The arbiters charged hourly to consider disputes about discovery.
Direct testimony was taken by written statements ahead of the hearing. The statements and their exhibits were a significant portion of discovery.
In general, the rules of arbitration are agreed by the parties. The AAA has default Commercial Rules, but these are significantly sparse compared to the Federal Rules of Civil Procedure or any State rules of practice. Overall, the arbitration was a free-wheeling experience.
Arbitral awards are appealable only in egregious circumstances. They come more slowly than a jury’s verdict but at about the same pace as a final judgment (accounting for post-trial motions like JMOL). Arbiters tax the parties directly by the hour.
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