Originally from European International Arbitration Review

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I. Introduction to the Question of Institutional Liability

The average case numbers of arbitral institutions rise each year,  indicating a growing significance of institutional arbitration. At the same time, case numbers rise where unsatisfied parties sue the institution.  Whereas the AAA was already founded in 1926, U.S. cases regarding the liability only came up starting in 1967 with Peters Sportswear Co., Inc. v. AAA, Eastland Woolen Mills, Inc.,  where Peters Sportswear Co. sought to enjoin the AAA from proceeding with an arbitration initiated by Woolen Mills Inc. Compared to the beginnings of institutional arbitration there is a trend that parties are less willing to simply accept the decisions of arbitral tribunals and institutions.  On the one hand, these are cases where the parties are not satisfied with the administration of the case, because the institution missed to distribute relevant documents to all parties and arbitrators  or because the institution purportedly violated the right to be heard as it only communicated with one of the parties.  A decision of the ICC, to extend the time limit for rendering an award, led to a claim by one party that the proceedings were unduly delayed.  An award might be set aside if the act of an arbitral institution influences the outcome of the award and if one of the few grounds for setting aside an award under the applicable national law is given.  Even when the award is set aside, the parties to the proceeding incurred costs for the setting-aside procedure and they need to start a whole new, expensive, procedure afterwards to solve their dispute. Some try to reimburse those costs from the institution. On the other hand, there are cases where parties try to attack decisions made by the institution with regard to procedural questions. This includes especially the decision on the acceptance or dismissal of a case based on a prima facie assessment of the validity of the arbitration clause.