Calling all Arbitrators: Reclaim Control of the Arbitration Process - The Courts Let You - Dispute Resolution Journal - Vol. 60, No. 1
Mr. Robbins is a partner in Kaufmann, Feiner, Yamin, Gildin & Robbins LLP, in New York City, where he specializes in commercial arbitration, mediation, litigation and disciplinary proceedings before regulatory authorities. Previously, he served as special deputy attorney general of New York State and was director of the compliance, arbitration and disciplinary hearings departments at the American Stock Exchange. The author of the Securities Arbitration Procedure Manual (5th ed., 2005, Matthew Bender/Lexis/Nexis), he also writes the annual “Practice Commentary” on Article 23-A of the New York General Business Law for McKinney’s Consolidated Laws of New York. In addition, he chairs PLI’s annual CLE programs on securities arbitration and mediation.
Originally from Dispute Resolution Journal
Arbitration has been billed as the cost-effective, expeditious alternative to commercial litigation. It has, however, to a large extent, become a costly, dilatory and unpredictable melding of litigation and arbitration, primarily due to the parties’ representatives who are responsible for grafting the implements of litigation onto the much simpler system of arbitration. Regrettably, arbitrators are often their “aiders and abettors” when they permit attorneys to wrest control of the process. Such arbitrators are fearful that the courts, when reviewing their conduct, will vacate their awards. That fear is unfounded and this article will show you why that is so. The consequence of arbitrators relinquishing responsibility for managing the arbitration process is twofold: First, it will lead constituents of arbitration—i.e., businesses and attorneys—to lose respect for the process. Second, it will cause those arbitrators to suffer a loss of income (not surprisingly), since users of the process want an efficient arbitration and will no longer select them. The purpose of this article is to provide a backbone transplant to my fellow arbitrators, to endow them with the courage to reclaim control of the process while still affording all parties a fair opportunity to present their case.
The places to look to resolve this problem are court decisions on motions to vacate awards. Hindsight can be 20/20 and we can learn from it. The disappointed parties who filed these motions hoped for an arbitration afterlife, but what they more often found was a second loss in the courts.
Despite the occasional headline declaring the overturning of an arbitration award, courts have overwhelmingly held that they will not second-guess arbitrators since the parties voluntarily agreed to arbitrate their dispute. Doubts as to the correctness of arbitrator conduct are outweighed by the agreement of the parties to forgo certain judicial procedures in exchange for a hearing by an experienced arbitrator of their choosing who is mandated by ethical principles to “cut to the chase.” Since arbitration is intended to be a final and binding process, courts steadfastly resist efforts by parties to get a “second bite of the apple”—i.e., another arbitration hearing between the same parties.
This article explains the grounds for vacating arbitration awards primarily based on arbitrator conduct and rulings. Arbitrators are given wide latitude in managing cases, but when they go seriously “off course”—such as in failing to make required disclosures, or deciding issues not in the pleadings, or taking part in ex parte communications, or refusing to grant a reasonable adjournment request or admit pertinent and material evidence, or denying parties the basics of due process—courts will vacate their awards. But not often.