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When parties turn to arbitration to resolve their dispute, they assume that they have opted for an alternative to court litigation in which the procedures to be followed are not only simple, but understood by all. It is but for the arbitrator to apply these rules in a fair manner, and a decision will shortly be forthcoming in an expeditious and efficient manner. Regrettably, the above assumption, while reasonable, is not always accurate. Arbitrators regularly find themselves confronted with issues relating to jurisdiction and authority as well as the management of the arbitration, to which the parties gave little attention initially, but which they now realize may have a significant impact on the outcome. As a result, an arbitrator’s decisions must be made with respect to an unanticipated problem as to which there is no clear answer and which may even raise the specter of an appeal that, presumably, the parties were seeking to avoid when they first agreed upon arbitration. Accordingly, I would like to set out in this and succeeding articles some of the issues arbitrators wish the parties had considered before they had submitted the matter for arbitration. What are the actual issues to be arbitrated? Parties generally recognize that they have potential disagreements with respect to various issues but do not specify which of those are to be arbitrated. For example, arbitrators are called upon to decide disputes between employers and discharged employees. After signing a general agreement that will allow the arbitrator to arbitrate disputes arising out of the employment relationship, it becomes apparent that one party believes that the arbitrator’s authority is limited to deciding the lawfulness of the discharge, whereas the other believes that the arbitration was designed to resolve all of the employee’s claims, including pension rights or restrictive covenants on future employment. The arbitrator, confronted with no arbitration agreement, or one that discusses the scope of the arbitration in only the most general of terms, is reduced to speculating about the extent of his authority. This issue is particularly vexing when a complaint had already been filed in court and, thereafter, the parties agree that the court action should be discontinued and their dispute be submitted to arbitration. When they appear before the arbitrator, however, the parties disagree as to whether the arbitration is limited to the allegations contained in the original complaint or additional claims may be added (as they might in court) by reason of the general language relating to “all disputes” contained in the arbitration agreement. To assure that the arbitrator will in fact understand what issues are specifically subject to arbitration, therefore, parties should set forth with particularity the breadth of the arbitration agreement, including the issues to be decided by the arbitrator and, where appropriate, those issues that are specifically excluded. Should the arbitrator be bound by prior decisions of the court? As earlier noted, arbitration is often initiated following earlier court proceedings. Parties may have already filed motions, engaged in discovery and otherwise submitted themselves to the court for interim decisions. After the matter has been transferred to arbitration, however, the arbitrator becomes aware that the parties disagree about whether the prior decisions of the court are binding upon the arbitrator. For example, may the parties engage in additional discovery? In many matters transferred to arbitration, courts have already issued earlier rulings limiting the time for or scope of discovery. Once in arbitration, however, one of the parties seeks to reopen the discovery issue, seeking additional information to which he might not have been entitled had the matter remained in court. In these circumstances, the arbitrator must decide whether she is not bound by the prior rulings of the court; she is bound by the prior rulings of the court; or she has the authority of a trial judge to exercise discretion in modifying an earlier court order. Arbitrators with whom I have spoken have differing views with respect to whether they should feel themselves constrained by prior court actions. All of this could be avoided, of course, if the parties, in negotiating the transfer of a court case to arbitration, had considered which prior rulings of the court should be viewed as the law of the case and binding upon the arbitrator. This determination, of course, should be incorporated into the agreement to arbitrate. What law, if any, is to be employed by the arbitrator? Parties often do not set forth which law will be applied by the arbitrator. They assume, perhaps, that the arbitrator will make that decision much as would a judge in a court proceeding. The difficulty with that assumption, however, is that without direction, an arbitrator, unlike a judge, will lack the legal foundation based upon which courts are able to make these decisions. For example, an arbitrator could decide that he has the authority to make a decision unrestrained by the laws of a specific jurisdiction but may, as indicated in the Rules of the American Arbitration Association, “grant any relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties” Moreover, even if the arbitrator should decide that he is bound to decide the case based upon substantive law, the question remains, “Which law?” If the parties disagree as to whether the substantive law of Pennsylvania or New Jersey should apply, should the arbitrator, resolve that issue as if he were sitting as a Pennsylvania or New Jersey judge? In addition, how will the arbitrator decide what arbitration law should control the conduct of the arbitration? What is apparent, therefore, is that the parties should, in their arbitration agreement, set forth a clear and precise choice of law determination so that the arbitrator has guidance as to the substantive and procedural guidelines that will control the conduct of the arbitration. Do the Rules of Evidence apply? If so, which? Parties regularly agree to arbitration without considering whether and to what extent the rules of evidence will apply. This determination, however, will often favor one party over another. If the rules of evidence do not apply, the arbitrator may be prepared to accept affidavits in lieu of live testimony, so long as they are relevant and material. This decision will generally benefit a party whose witnesses are beyond the subpoena power of the arbitrator or who has limited resources and, therefore, cannot afford the expense of bringing in live expert witnesses. In this regard, it is surprising that many parties will sign agreements to arbitrate under the rules of an ADR provider (e.g. ADR Options, American Arbitration Association) without considering whether the rules of that particular provider require the arbitrator to apply formal rules of evidence or allow the admission of any evidence deemed material or relevant. Even assuming that the parties have agreed on employing the rules of evidence, however, often left unidentified is the court whose rules will control. Most of the arbitration agreements or rules of ADR providers that I have seen usually state that the parties will employ the rules of evidence of the court of competent jurisdiction in which the matter might otherwise have been brought. This particular provision, of course, is not always helpful as many cases may be brought in several different states or in the federal courts. Moreover, such differences in the rules of evidence may have an impact on the conduct or outcome of a trial. Consider, for example, a case in which the admissibility of the testimony of an expert may hinge upon the applicability of the Daubert or Frye rules. Or, consider the differing uses to which statements in a learned treatise may be made under state and federal rules of evidence. Without identifying “the court of competent jurisdiction in which the case may have been brought”, the admissibility of the evidence may remain an undeterminable issue. If the parties want the rules of evidence to apply, therefore, they should not only so advise the arbitrator but also designate which jurisdiction’s rules are intended. And, in this regard, the parties may advise the arbitrator that they wish to modify the rules of evidence (as many ADR providers have done) by, for example, allowing the introduction of certain testimony through reports, while otherwise retaining the rules of evidence. What is clear, however, is that this issue should not be ignored if the arbitrator is to have a clear idea as to the admissibility of evidence during the arbitration. Many other items that arbitrators would hope the parties would consider before reaching a final and irrevocable decision to arbitrate will be considered in future articles. ABRAHAM J. GAFNI is a mediator/arbitrator with ADR Options and a professor at Villanova University School of Law.

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