Creating an Economical and Efficient Arbitration Process is Everyone's Business - Chapter 3 - AAA Handbook on Arbitration Practice - Second Edition
Author(s):
Kent B. Scott
Adam T. Mow
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Published:
December, 2015
Author Detail:
Kent B. Scott is a shareholder in Babcock Scott & Babcock, a construction law firm in Salt Lake City, as well as an arbitrator and mediator. Adam T. Mow is an attorney with Jones Waldo Holbrook & McDonough in the Salt Lake City office, specializing in construction law. Mr. Mow also serves as an arbitrator and mediator. Both authors serve on the commercial panel of the American Arbitration Association and both are members of the Utah Bar Association's Dispute Resolution Section and Utah Dispute Resolution. In addition, Mr. Scott serves on the panel for the U.S. District Court (Utah) and is a member of the ABA's Dispute Resolution Section and its Forum on the Construction Industry.
Description:
Originally from:
AAA Handbook on Arbitration Practice - Second Edition
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CHAPTER 3
CREATING AN ECONOMICAL AND EFFICIENT
ARBITRATION PROCESS IS EVERYONE’S
BUSINESS
Kent B. Scott and Adam T. Mow
I. Introduction
Arbitration is thousands of years old. From Aristotle to the
Elizabethan era, people have recognized that disputes are often best
resolved outside of the courts. And until very recently, arbitration was
the preferred dispute resolution method in the United States for the
construction industry. Other industries also have chosen to arbitrate
instead of using the courts to resolved disputes, and companies of all
kinds have chosen to use it for employment disputes. Within the last few
decades, however, arbitration has been criticized for evolving into a
process that mirrors litigation. The causes most likely were advocates
who were unfamiliar with arbitration and did not understand that it
differed from litigation, as well as arbitrators who failed to exercise
adequate control over the process. In fact, many arbitrators viewed
themselves as powerless referees and so they routinely granted requests
for postponements, allowed long drawn-out proceedings, and refused to
hear dispositive motions that could bring the case to an early conclusion.
On the other hand, arbitrators who would exercise authority had little
ability to sanction a party for failure to comply with an arbitral order.
The process clearly needed change. For decades, the American
Arbitration Association (AAA) has been at the forefront of improving
and streamlining the process through its rule revisions. In 1999, the AAA
released significantly revised commercial arbitration rules that, among
other things, encouraged the use of preliminary hearings, clarified the
discretion and authority of the arbitrator, addressed the issue of arbitral
interim relief, created Optional Rules for Emergency Measures of
Protection (i.e., relief needed before the arbitrator is appointed), added
Optional Procedures for Large Complex Cases, and amended the
Expedited Procedures for small cases to make them more efficient.
The AAA Construction Industry Arbitration Rules and Mediation
Procedures underwent a similarly significant revision in 2009. One major
improvement was the creation of a three-track system for small, regular,
and large construction cases. The rules also expanded the powers of the
arbitrator in regular and large cases and provided a more efficient
process keyed to the size and complexity of the dispute.
Meanwhile, the National Conference of Commissioners on Uniform
State Laws (NCCUSL) formed a committee to draft a new Uniform
Arbitration Act to replace the 1955 version (enacted in many states) and
bring arbitration law in line with judicial arbitration decisions. In August
of 2000, the NCCUSL and the American Bar Association approved the
Revised Uniform Arbitration Act 2000 (RUAA) and the ABA agreed to
promote it to the states for enactment. So far 18 states and the District of
Columbia have done so. The RUAA contains vastly expanded arbitrator
powers, including the power to issue provisional remedies, determine the
appropriate amount of discovery, impose sanctions, issue and enforce
third-party subpoenas, hear and decide dispositive motions, streamline
the presentation of evidence, and award punitive damages and attorney
fees in specified circumstances. In many other states the original UAA
remains in effect, while a few states have unique arbitration statutes,
including New York and California.
Notwithstanding these reforms, parties and lawyers remained
concerned that arbitration is no longer efficient and economical. Some
say it has become the mirror image of “scorched earth” litigation and
some call it an “arbi-trial” or “arbrigation”.
In 2009, many professional arbitrators turned their attention to the
problem of the increasing time and cost of arbitration. This took place at a
summit convened in the nation’s capital by the College of Commercial