Eric Wiechmann ()
One of the most important steps in ensuring an effective arbitration is to be fully prepared for the preliminary hearing that will be held by the arbitrators soon after they have been appointed. At this hearing the arbitrators will discuss all aspects of the process and set a schedule both for prehearing preparation and the hearing. After the hearing the arbitrators will issue a scheduling order setting out the parameters for prehearing preparation (pleadings, information exchange, motion practice) and the hearing with requisite deadlines. As discussed above, once deadlines are established, most arbitrators will be reluctant to amend them.
To be prepared you need to fully understand the legal and factual issues raised by the complaint and response and any counterclaim. The best way to get control of this process is to obtain a copy of the rules of the designated arbitrable institution, which contains a preliminary hearing checklist (see AAA Commercial Rules R-22 and P-2, CPR Administered Arbitration Rules, Rule 9.3). These are available to the participants or the public on the institutions’ websites. Even if the arbitration is self-administered, these checklists present an excellent review of the issues that should be addressed at the preliminary hearing. Also, many arbitrators will have prepared their own checklist to be used at the hearing. If they do not distribute one to you, ask them if they have a list of the subjects that they want to discuss.
These checklists will vary somewhat but usually address the following issues:
• When will the hearing be held and how long will it run?
• Has contractually directed mediation been attempted or would the parties consider mediating the dispute prior to the hearing?
• Is either party considering a jurisdictional challenge to the arbitration or do they need any emergency or interim relief? Is there any related litigation or arbitration pending?
• Will the parties confirm the authority of the arbitrators?
• Do the parties need a more detailed statement of the opponent’s claims or defenses and does either party anticipate amending claims, counterclaims or defenses?
• Are all necessary or appropriate parties included in this arbitration?
• Are there any provisions of the arbitration clause that need to be addressed?
• Confirm what arbitration rules and procedural and substantive law will govern the arbitration.
• Do the parties believe any threshold or dispositive motions may clarify or simplify the arbitration (consolidation of claims with another arbitration, bifurcation of hearing, dismissal of specified claims or defenses)?
• Protocol for prehearing exchange of documents or electronic information (scope, timing, cost, who pays).
• Should additional discovery be allowed (depositions, inspections, limited interrogatories)?
• Is there a need for third-party subpoenas?
• Are measures needed to preserve the confidentiality of the parties’ information?
• Are experts being considered and, if so, what procedure will be followed in identifying experts, exchanging reports and the need for any follow-up?
• Timing for identifying witnesses and their testimony, exchanging exhibits, submitting prehearing briefs or similar submissions.
• The procedure at the hearing, including how testimony will be taken (live, written witness statements, remote video), use of experts, division of time, need for stenographic record or technology. These issues might be finalized at an interim hearing closer to the hearing date.
Once you have reviewed the list, have an answer or position for each of the points. Make sure you have discussed the various issues with your client so they are in agreement with the timing, scope, and cost of the prehearing activities and the length of the hearing. In-house counsel and their clients frequently are faced with the tension of trying to honor the inherent efficiency and expedition of the arbitration process which was desired at the time of the negotiation of the contract with the desire of the in-house counsel and client at the time of the dispute to make sure they will be adequately prepared to prove their case especially in light of the very limited appeal rights. Addressing these potentially conflicting expectations will be necessary in trying to establish an appropriate prehearing framework. It is also of great value to have your client attend the prehearing conference so that they fully understand the process and can participate in any decisions that will directly affect the cost and length of the arbitration. Preparing the client for this session also presents an opportunity for them to consider mediation or settlement of the dispute.
Arbitrators appreciate when the parties can reach agreement on many of the checklist issues. Contact the other counsel and try to work out as many issues as you can. Remember arbitration is a party-driven issue and this is their chance to have as much input as practical. Also, be creative as to approaches to discovery or motion practice. Arbitrators will usually listen to any suggestion put forward by the parties that will simplify the prehearing process and save everyone time and money.
The next segment will begin with prehearing motions.