Originally from Dispute Resolution Journal

On July 1, 2003, the American Arbitration Association (AAA) revised its Commercial Arbitration Rules. In addition to some technical revisions, the AAA made two significant changes to these rules. The most dramatic change involves the status of arbitrators appointed by only one party. This change reverses the traditional presumption that party-appointed arbitrators are assumed to be partisan unless the parties have agreed otherwise. The revised rule now provides that party-appointed arbitrators will be held to the same standards of independence, impartiality and disclosure as other arbitrators, unless the parties have agreed to a different standard.

The other major change concerns large, complex cases. As of July 1, 2003, the AAA’s special rules for managing large, complex cases will no longer be an option that the parties are encouraged to adopt. Instead, these rules will automatically apply to all cases in which $500,000 or more is at stake, unless the parties agree otherwise.

Reversal of Presumption about Party-Appointed Arbitrators

For many years, the problem of the party-appointed arbitrator has vexed arbitration in the United States. The problem arises in the context of three-arbitrator panels, when the parties have agreed that each side is to pick one panelist and the chair of the panel is selected either by the party-named arbitrators or by a neutral organization, such as the AAA.

Selection by the parties of two of the arbitrators on the panel has never been the AAA’s preferred method of selecting arbitrators. In cases where a panel of three arbitrators will hear the case, the AAA’s Commercial Arbitration Rules provide for all of the arbitrators to be selected from a list provided by the AAA, absent agreement of the parties to use another method. But the AAA has traditionally accommodated the parties’ preference for party-appointed arbitrators if their agreement provides for that method of selection.