THE COLLEGE OF COMMERCIAL ARBITRATORS GUIDE TO BEST PRACTICES

IN COMMERCIAL ARBITRATION

Fourth Edition

James M. Gaitis

Editor in Chief

A. Holt Gwyn Laura A. Kaster

John J. McCauley

Editors

JURIS

© 2017

by JurisNet, LLC All rights reserved.

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v

SUMMARY CONTENTS

Contents ....................................................................................................... xi Preface .................................................................................................... xxxv About the Editors ................................................................................ xxxix About the Contributors .......................................................................... xliii Table of Abbreviations ............................................................................. liii

Chapter 1 INTRODUCTION

Winslow Christian, James M. Gaitis, A. Holt Gwyn, Carl F. Ingwalson, Jr., Laura A. Kaster, June R. Lehrman,

John J. McCauley, Vivien B. Shelanski, Curtis E. von Kann, and Robert W. Wachsmuth

........................................................................................................................ 1

Chapter 2 APPOINTMENT, DISCLOSURES, AND

DISQUALIFICATION OF NEUTRAL ARBITRATORS James H. Carter, Richard Chernick, Peter D. Collisson, Paul J. Dubow,

Ruth V. Glick, Robert A. Holtzman, June R. Lehrman, James R. Madison, John J. McCauley, Bruce E. Meyerson, and Michael S. Oberman

........................................................................................................................ 7

Chapter 3 NONNEUTRAL ARBITRATORS

Richard Chernick, James M. Gaitis, and Robert A. Holtzman ...................................................................................................................... 37

Chapter 4 ARBITRATOR FEES AND EXPENSES

John T. Blankenship, Louis Coffey, Philip E. Cutler, Neal M. Eiseman, A. Holt Gwyn, Laura A. Kaster, Allison J. Snyder, and Curtis E. von Kann

...................................................................................................................... 55

vi Summary Contents

Chapter 5 DETERMINING JURISDICTION

AND ARBITRABILITY William G. Bassler, R. Doak Bishop, Robert B. Davidson, Richard Chernick,

James M. Gaitis, Barry H. Garfinkel, Carl F. Ingwalson, Jr., Alan M. Kanter, June R. Lehrman,

James R. Madison, and John J. McCauley ...................................................................................................................... 85

Chapter 6 PREHEARING CONFERENCES AND

PREHEARING MANAGEMENT IN GENERAL David N. Brainin, William B. Fitzgerald, James P. Groton,

Carl F. Ingwalson, Jr., Laura A. Kaster, John J. McCauley, Gerald F. Phillips, Deborah Rothman, Vivien B. Shelanski, Allison J. Snyder, Curtis E. von Kann,

and John H. Wilkinson ................................................................................................................... 115

Chapter 7 MOTIONS

Gary L. Benton, Joseph F. Canterbury, Jr., Deborah A. Coleman, Louise E. Dembeck, Eugene I. Farber, A. Holt Gwyn,

Carroll E. Neesemann, Robert W. Wachsmuth, and Dana Welsh ................................................................................................................... 155

Chapter 8 DISCOVERY

John M. Barkett, R. Doak Bishop, M. Scott Donahey, James W. Durham, James M. Gaitis, George Gluck, Marc J. Goldstein, David M. Heilbron,

John A. Holsinger, Louise A. LaMothe, John J. McCauley, Kathleen A. Roberts, Deborah Rothman, John M. Seitman, Stanley P. Sklar,

R. Wayne Thorpe, and Robert P. Wax ................................................................................................................... 177

Summary Contents vii

Chapter 9 SUMMONING NONPARTY WITNESSES

John M. Barkett, George Gluck, Marc J. Goldstein, John A. Holsinger, and John J. McCauley

................................................................................................................... 199

Chapter 10 eDISCOVERY

A. J. Krouse, Louise A. LaMothe, Nancy F. Lesser, Susan H. Nycum, Barbara A. Reeves, Deborah Rothman,

Irene C. Warshauer, and John H. Wilkinson ................................................................................................................... 219

Chapter 11 THE HEARING ON THE MERITS

Henri C. Alvarez, William L. D. Barrett, Louis A. Craco, William B. Fitzgerald, James P. Groton, A. Holt Gwyn, John J. McCauley, John A. Sherrill,

Allison J. Snyder, and Curtis E. von Kann ................................................................................................................... 241

Chapter 12 AWARDS AND SUBSTANTIVE INTERLOCUTORY

ARBITRAL DECISIONS John A. Barrett, Thomas J. Brewer, Jay W. Elston, James M. Gaitis,

Richard A. Levie, John Burritt McArthur, Michael S. Oberman, and Michael S. Wilk

................................................................................................................... 291

Chapter 13 POSTAWARD MATTERS

John K. Boyce, III, Paul J. Dubow, James M. Gaitis, Larry R. Leiby, James R. Madison, Lawrence R. Mills, Stephen S. Strick,

Christi L. Underwood, and David E. Wagoner ................................................................................................................... 323

viii Summary Contents

Chapter 14 EMERGENCY ARBITRATORS

James M. Gaitis and Michael S. Wilk ................................................................................................................... 343

Chapter 15 INTRATRIBUNAL RELATIONS

John T. Blankenship, Louis Coffey, Philip E. Cutler, A. Holt Gwyn, and Curtis E. von Kann

................................................................................................................... 367

Chapter 16 CLASS ARBITRATION

William L. D. Barrett, Robert B. Davidson, Eugene I. Farber, James M. Gaitis, Louise A. LaMothe, James R. Madison, Bruce E. Meyerson,

Deborah Rothman, Francis O. Spalding, and John H. Wilkinson ................................................................................................................... 445

Chapter 17 UNIQUE ISSUES IN CONSTRUCTION ARBITRATION Albert Bates, Jr., John E. Bulman, Patricia D. Galloway, Neal M. Eiseman,

Herbert H. (Hal) Gray, III, A. Holt Gwyn, John W. Hinchey, Allen Overcash, and Stanley P. Sklar

................................................................................................................... 467

Chapter 18 INTERNATIONAL ARBITRATION

(Preliminary Matters) Gerald Aksen, Axel Baum, Robert B. Davidson, James M. Gaitis,

Sally Harpole, Richard H. Kreindler, Urs M. Laeuchli, Lawrence W. Newman, Philip D. O’Neill, Elliot E. Polebaum,

and Lucy F. Reed ................................................................................................................... 509

Summary Contents ix

Chapter 19 INTERNATIONAL ARBITRATION

(Conduct of Proceedings) Gerald Aksen, Axel Baum, Robert B. Davidson, James M. Gaitis,

Sally Harpole, Richard H. Kreindler, Urs M. Laeuchli, Lawrence W. Newman, Philip D. O’Neill, Elliot E. Polebaum,

and Lucy F. Reed ................................................................................................................... 547

Chapter 20 HYBRID ARBITRATION PROCESSES

Trey Bergman, Thomas J. Brewer, William H. Levit, Jr., Richard R. Mainland, Gerald F. Phillips,

and Edna R. Sussman ................................................................................................................... 591

Appendix I GUIDANCE NOTE: ARBITRATION AND SOCIAL MEDIA

Thomas D. Halket, Chair, Stephen P. Gilbert, Herbert H. (Hal) Gray, III, Larry D. Harris, Robert A. Holtzman, William H. Lemons,

Peter L. Michaelson, Edna Sussman, Irene C. Warshauer, and John H. Wilkinson

................................................................................................................... 613

Appendix II GUIDANCE NOTE: SECURITY OF AN ARBITRATOR’S

ELECTRONIC INFORMATION Gerald G. Saltarelli, William H. Levit, Jr., and Mitchell L. Marinello

................................................................................................................... 625

Index ................................................................................................................... 639

xi

CONTENTS

Preface ................................................................................................................ xxxv About the Editors ............................................................................................ xxxix About the Contributors ..................................................................................... xliii Table of Abbreviations ........................................................................................ liii

Chapter 1

INTRODUCTION Winslow Christian, James M. Gaitis,

A. Holt Gwyn, Carl F. Ingwalson, Laura A. Kaster, June R. Lehrman, John J. McCauley, Vivien B. Shelanksi,

Curtis E. von Kann, and Robert W. Wachsmuth .................................................................................................................................... 1

Chapter 2

APPOINTMENT, DISCLOSURES, AND DISQUALIFICATION OF NEUTRAL ARBITRATORS James H. Carter, Richard Chernick, Peter D. Collisson, Paul J. Dubow,

Ruth V. Glick, Robert A. Holtzman, June R. Lehrman, James R. Madison, John J. McCauley, Bruce E. Meyerson, and Michael S. Oberman

.................................................................................................................................... 7

I. Introduction .......................................................................................... 7

II. Appointment of Arbitrators ............................................................... 7 A. Initial Ex Parte Communications ............................................... 8 B. Determining Impartiality and Independence ........................... 9 C. Determining Fitness to Serve ................................................... 11 D. Establishing Terms of Appointment ....................................... 12 E. Appointments Made through Arbitral Institutions ............... 15 F. Appointments in Nonadministered Arbitrations .................. 15 G. Party-Appointed Neutral Arbitrators ...................................... 16

III. Disclosures .......................................................................................... 18 A. FAA .............................................................................................. 18 B. RUAA ........................................................................................... 19

xii Contents

C. AAA/ABA Code ........................................................................ 19 D. Other Ethical Standards ............................................................ 20

1. California .............................................................................. 21 2. Other States ......................................................................... 23

E. Judicial Guidance ........................................................................ 23 1. Judicial Application of Disclosure Standards ................. 23 2. Interest in the Outcome of the Proceeding .................... 24 3. Existing or Recent Business or Professional

Relationships between the Proposed Arbitrator and a Party, Counsel, Known Witness, or Coarbitrator ....... 25

4. Other Facts That Might Reasonably Affect Impartiality ........................................................................... 26

5. Duty to Investigate ............................................................. 26 F. Role of Coarbitrators in Disclosure Process .......................... 27 G. Role of Parties in Disclosure Process ...................................... 27

IV. Social Media ........................................................................................ 28 A. Impartiality and Independence ................................................. 29 B. Disclosure .................................................................................... 30

V. Disqualification ................................................................................... 31

VI. Continuing Disclosures and Limitations on Activities during Pendency of a Case ............................................................................ 34

Chapter 3

NONNEUTRAL ARBITRATORS Richard Chernick, James M. Gaitis, and Robert A. Holtzman

.................................................................................................................................. 37

I. Arbitrator Selection Generally ......................................................... 37 A. Parties’ Arbitration Agreement ................................................ 37 B. Institutional Rules, Guidelines, and the AAA/ABA Code .... 38

II. Limitations on Choice of Nonneutral Arbitrators ........................ 40 A. Parties’ Arbitration Agreement ................................................ 40 B. Applicable Law and Ethical Rules ........................................... 41

III. Determining Status of Party-Appointed Arbitrators .................... 42 A. Party-Appointed Arbitrators’ Role in Determining Status

of Arbitrators ............................................................................... 42

Contents xiii

B. Chairperson’s Role in Determining Status of Arbitrators ..... 43 C. Unique State Law Considerations regarding the Status of

Arbitrators ................................................................................... 44

IV. Disclosures by Nonneutral Arbitrators .......................................... 45 A. General Practice of Disclosure ................................................. 45 B. Unique State Requirements Relating to Disclosures ............ 46 C. Changes in Status of Arbitrators .............................................. 47 D. Disqualification Challenges to Nonneutral Arbitrators ........ 48

V. Nonneutral Arbitrator Conduct ....................................................... 49 A. Ensuring a Fundamentally Fair Hearing ................................. 49 B. Ex Parte Communications ......................................................... 50 C. Providing Assistance to the Parties ......................................... 51

VI. Value of Nonneutral Arbitrators in Commercial Arbitrations ... 52

VII. Structural Bias ..................................................................................... 52

Chapter 4

ARBITRATOR FEES AND EXPENSES John T. Blankenship, Louis Coffey, Philip E. Cutler, Neal M. Eiseman,

A. Holt Gwyn, Louis A. Kaster, Allison J. Snyder, and Curtis E. von Kann .................................................................................................................................. 55

I. Arbitrator Fees ................................................................................... 55 A. The Importance of Clear Initial Agreements ......................... 55 B. Billing Rates ................................................................................. 56 C. What Time Should Be Charged? .............................................. 57 D. Recording Billable Time ............................................................ 60 E. Cancellation Fees ........................................................................ 61

II. Arbitrator Expenses ........................................................................... 64 A. Travel ............................................................................................ 64 B. Lodging ........................................................................................ 65 C. Meals ............................................................................................. 66 D. Arbitrator Assistants .................................................................. 67

III. The Billing and Collection Process ................................................. 68 A. Estimates of Fees and Expenses .............................................. 68 B. Deposits ....................................................................................... 70 C. Invoices ........................................................................................ 71

xiv Contents

D. Under Some Circumstances, Arbitrators May Choose Alternative Methods of Billing ................................................. 72

E. Collection ..................................................................................... 73

IV. The Nonpayment of Filing or Administrative Fees and Deposits for Arbitrator Fees ............................................................ 76 A. The Consensual Process May Be Abused by Refusal

to Pay ............................................................................................ 76 B. Interim Relief May Provide Remedy for Nonpayment ........ 77 C. Recent Cases Suggest Nonpayment Is a Material Breach

of an Arbitration Agreement .................................................... 79 D. Nonpayment as a Tactic ............................................................ 80

Chapter 5

DETERMINING JURISDICTION AND ARBITRABILITY

William G. Bassler, R. Doak Bishop, Robert B. Davidson, Richard Chernick, James M. Gaitis, Barry H. Garfinkel, Carl F. Ingwalson, Jr.,

Alan M. Kanter, June R. Lehrman, James R. Madison, and John J. McCAuley .................................................................................................................................. 85

I. Introduction ........................................................................................ 85

II. The Five Categorical Types of Challenges to Arbitrability ......... 87 A. Type I Challenges: Whether the Objecting Party, or Its

Agents or Benefactors, Entered into a Commerical Agreement Containing an Arbitration Clause ........................ 88 1. The Distinction between Contract Existence and

Contract Enforceability ...................................................... 89 2. The Initial Need to Determine Whether the

Existence of the Contract Is Challenged ......................... 92 3. The Nature of a Challenge Does Not Depend on

Whether a Contract Is Void or Voidable ........................ 93 4. Mere Allegation and Court Adjudication ........................ 94 5. Applicability of Delegation Clauses to Cases

Involving Contract Existence Challenges ....................... 95 B. Type 2 Challenges and the Separability Doctrine: Whether

an Existing Commercial Agreement Is Unenforceable Due to the Application of a Contract Avoidance Defense .... 96

Contents xv

1. The Nature of Type 2 Challenges .................................... 96 2. The Separability Doctrine .................................................. 96

C. Type 3 Challenges: Whether the Dispute Falls Outside the Scope of the Arbitration Clause ...................................... 100

D. Type 4 Challenges: Whether the Subject Matter of the Dispute Is Legally Arbitrable .................................................. 101

E. Type 5 Challenges: Whether a Precondition to Arbitration Has Been Met ............................................................................ 103

III. The Delegation Clause .................................................................... 104 A. When May the Delegation Clause Be of Use? ..................... 104 B. What Is Needed to Make Delegation Clauses Effective? .... 105

1. Present ................................................................................ 105 2. Clear and Unmistakable ................................................... 106 3. Unchallenged ..................................................................... 106

IV. Making the Arbitrability Decision ................................................. 107

V. Waiver ................................................................................................ 109

VI. Arbitrability of Class Claims ........................................................... 111

VII. Procedure for Determining Jurisdiction and Arbitrability Objections ......................................................................................... 112

Chapter 6

PREHEARING CONFERENCES AND PREHEARING MANAGEMENT IN GENERAL

David N. Brainin, William B. Fitzgerald, James P. Groton, Carl F. Ingwalson, Jr., Laura A. Kaster, John J. McCauley, Gerald F. Phillips, Deborah Rothman, Vivien B. Shelanski, Allison J. Snyder, Curtis E. von Kann,

and John H. Wilkinson ................................................................................................................................ 115

I. The Importance of Prehearing Management ................................ 115

II. Convening the Prehearing Conference ........................................ 116 A. Time of the Prehearing Conference ...................................... 116 B. Who Should Participate in the Prehearing Conference ...... 117 C. Location of the Prehearing Conference ................................ 118

xvi Contents

D. Preparing the Agenda for the Prehearing Conference ....... 119 E. Giving Notice of the Prehearing Conference ...................... 120

III. Conducting the Prehearing Conference ....................................... 121 A. Arbitrators’ Introductory Statement ...................................... 121 B. Addressing the Conference Agenda Items ........................... 121 C. Hearing Procedures Checklist ................................................ 121

IV. Memorializing the Prehearing Conference .................................... 125

V. A Closer Look at Matters to Address at the Prehearing Conference and during the Prehearing Phase of the Proceeding ......................................................................................... 126 A. Identity of the Parties ............................................................... 126 B. Claims and Defenses Presented ............................................. 126 C. Applicable Arbitration Agreement, Law, and Rules ........... 127 D. Disputes concerning Arbitrability .......................................... 127 E. Information Required for Additional Arbitrator

Disclosures ................................................................................. 127 F. Consolidation and Joinder ...................................................... 128 G. Discovery ................................................................................... 130 H. Written Testimony.................................................................... 131 I. Motions ...................................................................................... 132 J. Providing Specialized Information to Arbitrators ............... 132 K. Communication Ground Rules .............................................. 132 L. Location of the Hearing .......................................................... 133 M. Dates of the Hearing and Prehearing Submissions ............. 133 N. Hearing Subpoenas for Nonparty Witnesses ....................... 134 O. Continuances and Cancellations ............................................ 135 P. Nature of Award ....................................................................... 137 Q. Time of Award .......................................................................... 138 R. Time of Disclosure of Any Offers to Compromise That

Potentially Affect the Award .................................................. 139 S. Considering Issues, Legal Theories, Authorities, or

Analysis Not Specifically Raised by the Parties ................... 141 1. Ascertaining and Applying the Law ............................... 141 2. The Lack of Consensus in the Arbitration

Community ........................................................................ 143 3. Some Common Ground .................................................. 145 4. Areas of Disagreement ..................................................... 146

Contents xvii

T. Other Matters ............................................................................ 149

VI. Encouraging Mediation or Other Settlement Efforts ................ 150

VII. Subsequent Prehearing Management ............................................ 152

Chapter 7

MOTIONS Gary L. Benton, Joseph F. Canterbury, Jr., Deborah A. Coleman,

Louise E. Dembeck, Eugene I. Farber, A. Holt Gwyn, Carroll E. Neesemann, Robert W. Wachsmuth, and Dana Welsh

................................................................................................................................ 155

I. Introduction ...................................................................................... 155

II. Arbitral Authority to Hear Motions .............................................. 156

III. Types of Motions ............................................................................. 157 A. Filing and Service of Process .................................................. 157 B. Jurisdiction, Arbitrability, and Conditions Precedent ......... 158 C. Consolidation and Joinder ...................................................... 159 D. Interim and Conservatory Measures ..................................... 160 E. Pleadings .................................................................................... 162 F. Discovery ................................................................................... 163 G. Bifurcation ................................................................................. 163 H. Dispositive Motions ................................................................. 164 I. Motions to Disqualify Counsel ............................................... 166 J. Motions Based upon Statutes of Limitation ........................ 167 K. Motions in Limine or to Exclude Evidence ......................... 168 L. Claims of Privilege .................................................................... 170 M. Sanctions .................................................................................... 171 N. Continuances ............................................................................. 173 O. Disqualification of Arbitrators ............................................... 175 P. Motions during the Hearing on the Merits .......................... 176 Q. Modification of Award ............................................................ 176

xviii Contents

Chapter 8

DISCOVERY John M. Barkett, R. Doak Bishop, M. Scott Donahey, James W. Durham, James M. Gaitis, George Gluck, Marc J. Goldstein, David M. Heilbron,

John A. Holsinger, Louise A. LaMothe, John J. McCauley, Kathleen A. Roberts, Deborah Rothman, John M. Seitman, Stanley P. Sklar,

R. Wayne Thorpe, and Robert P. Wax ................................................................................................................................ 177

I. Introduction ...................................................................................... 177 A. Defining the Arbitrators’ Authority to Grant and Limit

the Scope of Discovery in Arbitrtion .................................... 177 B. Achieving Proportionality in Granting and Limiting

Discovery ................................................................................... 178 C. Arbitrators’ Tools for Ensuring Proportional Discovery ..... 180

II. Document Production .................................................................... 182 A. Applicable Arbitration Rules .................................................. 182 B. Document Requests ................................................................. 183 C. Duty to Supplement ................................................................. 184 D. Documents on Which Parties Intend to Rely ...................... 184 E. Claims of Privilege .................................................................... 185

III. Depositions of Party Witnesses ..................................................... 186 A. Arbitrators’ Authority .............................................................. 186 B. Limiting Depositions ............................................................... 187

IV. Interrogatories and Requests for Admissions ............................. 187

V. Discovery of Expert Witnesses ...................................................... 189 A. Depositions of Experts in General ........................................ 189 B. Scheduling Depositions of Expert Witnesses ...................... 189

VI. Discovery from Nonparties ............................................................ 189 A. Extent of Arbitrators’ Power to Issue Nonparty

Discovery Subpoenas ............................................................... 189 B. Form and Issuance of Discovery Subpoenas ....................... 190 C. Enforcement of Discovery Subpoenas ................................. 191

VII. Site Inspections ................................................................................ 193

VIII. Confidentiality and Protection of Proprietary Information ...... 194

Contents xix

IX. Discovery Disputes .......................................................................... 195 A. Encouraging Parties to Resolve Discovery Disputes ......... 195 B. Formal Resolution of Discovery Disputes and the

Issuance of Sanctions ............................................................... 195

Chapter 9

SUMMONING NONPARTY WITNESSES John M. Barkett, George Gluck, Marc J. Goldstein,

John A. Holsinger, and John J. McCauley ................................................................................................................................ 199

I. The Power to Summon Nonparties .............................................. 199

II. Determining the Applicable Statute—Federal and/or State ..... 201

III. Who May Summon? ........................................................................ 203

IV. May a Nonparty Be Summoned for Discovery? ......................... 205

V. May the Summons Be Served on a Distant Witness? ................ 209

VI. The Place of the Hearing ................................................................ 209

VII. Taking an Evidentiary Deposition of a Distant Witness Who Is Beyond the Reach of a Summons to Attend the Main Merits Hearing .................................................................................. 211

VIII. The Enforcing Court ....................................................................... 212

IX. To Whom May the Witness Raise Objections to the Subpoena? ......................................................................................... 215

X. The New York City Bar Association Annotated Model Federal Arbitral Witness Summons .............................................. 217

Chapter 10

eDISCOVERY A. J. Krouse, Louise A. LaMothe, Nancy F. Lesser, Susan H. Nycum,

Barbara A. Reeves, Deborah Rothman, Irene C. Warshauer, and John H. Wilkinson

................................................................................................................................ 219

I. Introduction ...................................................................................... 219

xx Contents

II. Overview of Differences between the Search and Retrieval of ESI and Traditional Paper Files ................................................ 219

III. Terminology ...................................................................................... 221

IV. A Guide for the Arbitrator in Managing the eDiscovery Process ............................................................................................... 224 A. Preparation for the Prehearing Process ................................ 224 B. Arbitration Holds ..................................................................... 228 C. Establishing Ground Rules for ESI Production Requests

and the Actual Production of ESI ......................................... 230 D. Managing eDiscovery at the Hearing .................................... 234

V. eDiscovery and Sanctions ............................................................... 234 A. Arbitrator’s Power to Impose Sanctions .............................. 234 B. Violation of Arbitration Holds Can Lead to Sanctions ...... 236 C. Rule 37(e) of the FRCP ........................................................... 236 D. Particular Sanctions .................................................................. 237

VI. Other Helpful References ............................................................... 238

VII. Conclusion ........................................................................................ 239

Chapter 11

THE HEARING ON THE MERITS Henri C. Alvarez, William L. D. Barrett, Louis A. Craco, William B. Fitzgerald,

James P. Groton, A. Holt Gwyn, John J. McCauley, John A. Sherrill, Allison J. Snyder, and Curtis E. von Kann

................................................................................................................................ 241

I. Designing the Appropriate Hearing Process ............................... 241

II. Document Hearings ........................................................................ 242

III. Setting the Basic Construct of the Hearing ................................. 243 A. Standards for Admission of Evidence .................................. 243 B. Order of Proof .......................................................................... 245

IV. Management of Exhibits ................................................................. 246 A. Treatment of Exhibits at the Hearing ................................... 246

1. Submission of Exhibits .................................................... 246 2. Consideration of Exhibits ................................................ 247

B. Core Exhibits ............................................................................ 251

Contents xxi

C. Demonstrative Exhibits ........................................................... 252 D. Exhibits Created during the Hearing ..................................... 253

V. Management of Testimony ............................................................. 253 A. The Witnesses Who May Be Called Should Be Disclosed

as Early as Possible ................................................................... 254 B. Examining Witnesses Who Have Provided Written

Witness Statements .................................................................. 255 C. Expert Witnesses ...................................................................... 256 D. Lay Witnesses ............................................................................ 258 E. Testimony from Witnesses at Other Locations ................... 259 F. Previously Recorded Testimony, Including Deposition

Transcripts ................................................................................. 259 G. Excluding Witnesses ................................................................ 261 H. Restrictions on Counsel’s Communications with

Witnesses during Testimony ................................................... 262

VI. Management of Hearing Time ....................................................... 262 A. Introduction .............................................................................. 262 B. Setting and Maintaining a Realistic Daily Schedule ............. 263 C. Monitoring Compliance with the Hearing Schedule........... 264 D. Requests for a Continuance or Additional Time ................. 265

VII. Management of Logistics ................................................................ 268 A. Use of Technology ................................................................... 268 B. Transcripts ................................................................................. 269 C. Hearing Room Logistics .......................................................... 269 D. Special Needs ............................................................................ 270

VIII. Site Visits ........................................................................................... 270

IX. Arbitrator Conduct during Hearings ............................................ 272 A. Controlling the Hearing ........................................................... 272 B. Setting the Tone ........................................................................ 273 C. Maintaining an Open Mind ..................................................... 273 D. Calling for Additional Evidence ............................................. 274

1. Questioning Witnesses ..................................................... 275 2. Calling for Additional Evidence ..................................... 277

E. Discussing the Case with Other Arbitrators ........................ 278 F. Dealing with Nonappearance of Witnesses ......................... 279 G. Making Further Disclosures.................................................... 280

xxii Contents

H. Addressing Arbitrator Performance Problems .................... 280 I. Closing the Hearing .................................................................. 281

X. Briefing .............................................................................................. 283 A. Prehearing Briefs ...................................................................... 283 B. Posthearing Briefs .................................................................... 284 C. Other Materials That May Assist Arbitrators ....................... 285

XI. Statements and Arguments of Counsel ........................................ 286 A. Opening Statements ................................................................. 286 B. Minisummaries .......................................................................... 287 C. Final Arguments ....................................................................... 287

Chapter 12

AWARDS AND SUBSTANTIVE INTERLOCUTORY ARBITRAL DECISIONS

John A. Barrett, Thomas J. Brewer, Jay W. Elston, James M. Gaitis, Richard A. Levie, John Burritt McArthur, Michael S. Oberman,

and Michael S. Wilk ................................................................................................................................ 291

I. Introduction ...................................................................................... 291 A. The Finality of Arbitral Awards and Decisions and the

Doctrine of Functus Officio ........................................................ 292 B. Ripeness ..................................................................................... 295

II. Partial Final Awards ......................................................................... 296

III. Nonfinal Interim Awards and Nonfinal Substantive Interlocutory Arbitral Decisions .................................................... 298

IV. Drafting Awards and Substantive Interlocutory Arbitral Decisions ........................................................................................... 300 A. Making a Definite and Final Award upon the Matter

Submitted ................................................................................... 300 B. Form of Award ......................................................................... 301 C. Content of Award ..................................................................... 308

1. Framework of Award ....................................................... 308 2. Detailed Sections of Award ............................................. 309

a. Identifying Arbitral Process and Issues to Be Determined ................................................................. 309

Contents xxiii

b. Analyzing the Evidence and the Law ..................... 310 c. Awarding Section ....................................................... 311 d. Catchall Provision ...................................................... 311

D. Preparation and Issuance of Award ...................................... 311

V. Remedies ........................................................................................... 314 A. Authority to Craft Remedies ................................................... 314 B. Punitive Damages ..................................................................... 315 C. Attorneys’ Fees, Arbitrators’ and Arbitral Institution

Fees, and Costs ......................................................................... 315 1. Attorneys’ Fees .................................................................. 315 2. Arbitrators’ and Arbitral Institution Fees and

Expenses ............................................................................. 317 3. Other Costs and Expenses .............................................. 317 4. The Issuance of Interim or Partial Awards pending

Determinations Relating to Fees and Expenses........... 318 D. Sanctions .................................................................................... 319 E. Preaward, Postaward, and Postjudgment Interest ............... 320

VI. Dissenting Opinions ........................................................................ 322

Chapter 13

POSTAWARD MATTERS John K. Boyce, III, Paul J. Dubow, James M. Gaitis, Larry R. Leiby,

James R. Madison, Lawrence R. Mills, Stephen S. Strick, Christi L. Underwood, and David E. Wagoner

................................................................................................................................ 323

I. Limited Grounds for Postaward Relief ........................................ 323 A. Doctrine of Functus Officio ........................................................ 323

1. Arbitrators’ Lack of Authority to Alter Determinations on the Merits after Issuance of an Award .......................... 324

2. Exceptions to Functus Officio ............................................ 326 a. Clerical, Computational, and Similar Errors ......... 326 b. Submitted but Unadjudicated Issues ...................... 327 c. Clarifications regarding the Intent of the Award..... 328

3. Other Allowed Postaward Arbitral Authority .............. 328 B. Interrelationship between the Functus Officio Doctrine,

Institutional Rules, and Arbitration Law .............................. 329

xxiv Contents

C. Sua Sponte Clarification of Awards and Corrections of Clerical and Similar Errors ...................................................... 330

D. The Effect of Motions to Modify an Award on Statutory Deadlines for Seeking Vacatur and Confirmation of Awards ........................................................................................ 331

E. Checklist for Arbitrators to Consider before Modifying an Award .................................................................................... 332

II. Issues Arising on Court Remand of a Final Award .................... 333 A. Complying with the Court’s Remand Instructions ............. 333 B. Remands and Insufficient Arbitration Records ................... 334 C. Fees and Costs Incurred in Addressing Awards on

Remand ...................................................................................... 336 D. Checklist for Arbitrators Faced with Remand ..................... 337

III. Postaward Ethics Issues .................................................................. 338 A. Maintaining Confidentiality of the Arbitration

Proceeding ................................................................................. 338 B. Assisting the Parties in Understanding the Award .............. 339 C. Postaward Relationships with Parties and Counsel................... 340

Chapter 14

EMERGENCY ARBITRATORS James M. Gaitis and Michael S. Wilk

................................................................................................................................ 343

I. Introduction ...................................................................................... 343

II. The Enforceability of Emergency Arbitral Decisions ................ 344

III. Appointment of and Disclosures by Emergency Arbitrators ..... 348

IV. Jurisdiction and Authority of Emergency Arbitrators ............... 350 A. The Parties’ Arbitration Agreement ...................................... 351 B. The Governing Rules ............................................................... 352 C. Possible Types of Emergency Relief ..................................... 355 D. The Required Showing by the Applicant .............................. 357 E. Deadlines for the Issuance of the Emergency Arbitrator’s

Decision ..................................................................................... 357

V. The Emergency Proceedings .......................................................... 358 A. Scheduling the Emergency Proceeding ................................. 358

Contents xxv

B. Challenges to the Jurisdiction and Authority of Emergency Arbitrators ............................................................ 360

C. Receipt of Evidence ................................................................. 361

VI. Drafting Emergency Arbitral Decisions and Awards ................ 362

VII. The Emergency Arbitrator’s Continuing Authority pending the Constitution of the Tribunal.................................................... 364

VIII. Post–Emergency Proceedng Considerations subsequent to the Constitution of the Tribunal.................................................... 365 A. Continuing Ethical Obligations subsequent to the

Constitution of the Tribunal ................................................... 365 B. Serving as an Arbitrator in the Proceeding or as an ADR

Specialist in Subsequent Settlement Negotiations ............... 365

Chapter 15

INTRATRIBUNAL RELATIONS John T. Blankenship, Louis Coffey, Philip E. Cutler,

A. Holt Gwyn, and Curtis E. von Kann ................................................................................................................................ 367

I. Introduction ...................................................................................... 367 A. The General Advantages and Disadvantages of a

Three-Arbitrator Tribunal ....................................................... 371 B. Chapter Organization .............................................................. 372

II. Selecting the Third Arbitrator and Selecting the Tribunal Chair ................................................................................................... 373 A. Various Means of Selecting the Third Arbitrator and the

Tribunal Chair ........................................................................... 373 B. Selecting the Third Arbitrator ................................................ 374

1. Preparing for the Selection Process ............................... 374 2. Consulting with the Appointing Party ........................... 374 3. Preparing a List of Candidates ........................................ 377 4. Communicating with the Other Party-Appointed

Arbitrator ............................................................................ 378 5. Obtaining Information from Candidates ...................... 379 6. Possible Need to Repeat the Process ............................. 382 7. Breaking an Impasse ......................................................... 383

C. Selecting the Tribunal Chair ................................................... 384

xxvi Contents

III. The Initial Tribunal Conference and the Preliminary Conference Agenda ......................................................................... 387 A. Determing the Tribunal’s First Steps .................................... 387 B. Convening the Initial Tribunal Conference ......................... 388 C. Potential Matters to Discuss at the Initial Tribunal

Conference ................................................................................. 390 1. Introductions ..................................................................... 390 2. Status of Party-Appointed Arbitrators .......................... 390 3. Disclosures ......................................................................... 391 4. Understanding the Parties’ Disputes .............................. 392 5. Securing Pertinent Materials from the Parties .............. 392 6. Determining the Framework of the Arbitration .......... 393 7. Clarifying or Modifying the Arbitration Agreement ... 393 8. Committing to Be Available throughout the

Arbitration .......................................................................... 394 9. Communications among Tribunal Members and with

Parties .................................................................................. 395 10. The Appropriate Extent of Discovery .......................... 396 11. Arbitrator Questioning of Witnesses ............................. 397 12. Seeking Additional Evidence or Legal Authorities ...... 399 13. Protocol for Tribunal Actions ........................................ 399 14. Addressing Challenges to a Tribunal Member’s

Continued Service and the Death, Disability, or Resignation of a Member ................................................. 401

15. Agreements with Parties concerning Fees and Expenses ............................................................................. 401

IV. Managing the Tribunal While Managing the Case ...................... 402 A. Tribunal Management in General .......................................... 403

1. Active Participation of All Tribunal Members ............. 403 2. Punctuality and Availability ............................................. 404 3. Death, Disability, or Absence of a Tribunal Member ... 404 4. Under- and Overmanagement by the Chair ................. 407 5. Interfacing with Administering Organizations ............. 407

B. Tribunal Involvement in Resolving Challenges to the Continued Service of a Tribunal Member ............................ 408

C. Billing Issues .............................................................................. 412 1. Differences in Amount of Time Billed for Similar

Work .................................................................................... 413

Contents xxvii

2. Differences in Amounts Invoiced for Expenses ......... 416 3. Monitoring Deposits ........................................................ 416

D. Nonlawyer Arbitrators ............................................................. 418 1. Introduction ....................................................................... 418 2. Attributes and Advantages Nonlawyer Arbitrators

Bring to the Process .......................................................... 419 a. Subject Matter Expertise .......................................... 419 b. Translator .................................................................... 419 c. A Unique Synergy ...................................................... 420

3. Potentially Problematic Aspects of Nonlawyer Arbitrators .......................................................................... 420 a. Lack of Legal Expertise ............................................ 420 b. Perspective ................................................................. 421 c. Inexperience as an Arbitrator .................................. 422

(i) Asking inappropriate questions or making inappropriate comments ................................... 422

(ii) Interacting improperly with the parties or witnesses and breaching confidentiality.......... 423

(iii) Disregarding the testimony of witnesses on the basis of personal experience ...................... 423

4. The Nonlawyer Arbitrator as a Wing Arbitrator ......... 423 5. The Nonlawyer Arbitrator as Chair ............................... 424

E. Case Postmortem and Arbitrator Peer Review .................... 424

V. Inappropriate Conduct of Tribunal Members at Hearings ....... 425 A. Introduction .............................................................................. 425 B. Tribunal Member Problems That May Occur during

Hearings ..................................................................................... 425 C. When the Problem Arbitrator Is a Wing .............................. 426 D. When the Problem Arbitrator Is the Chair .......................... 429

VI. The Deliberative Process ................................................................ 431 A. When Do Deliberations Begin? ............................................. 431 B. Prehearing Deliberations ......................................................... 433 C. Seeking Additional Legal Authority from the Parties or

Independently Seeking or Relying on Authorities Not Cited by the Parties .................................................................. 434

D. Deliberations during the Hearing .......................................... 435 E. Posthearing Deliberations ....................................................... 436 F. How Important Is Unanimity? ............................................... 439

xxviii Contents

VII. Preparation of Orders and Awards ............................................... 440 A. Administrative Orders ............................................................. 441 B. Substantive Orders and Awards ............................................. 441 C. Dissents and Dissenting Opinions ........................................ 443

Chapter 16

CLASS ARBITRATION William L. D. Barrett, Robert B. Davidson, Eugene I. Farber,

James M. Gaitis, Louise A. LaMothe, James R. Madison, Bruce E. Meyerson, Deborah Rothman, Francis O. Spalding, and John H. Wilkinson

................................................................................................................................ 445

I. Accepting an Appointment to Serve as an Arbitrator in a Class Arbitration .............................................................................. 445

II. Class Arbitrations and Disclosure ................................................. 447

III. The Applicability of General Arbitration Procedures and Principles to Class Arbitration ....................................................... 447

IV. Jurisdiction and Recent Supreme Court Jurisprudence ............. 448

V. Interpreting Arbitration Clauses That Are Silent on the Topic of Class Arbitration .............................................................. 450

VI. The Effect of a Class Action Preclusion Clause on Arbitral Jurisdiction ........................................................................................ 451

VII. Determining Whether a Class Arbitration May Be Maintained under the Parties’ Arbitration Agreement .................................... 452 A. Clause Construction Awards .................................................. 452 B. Ripeness/Finality of Clause Construction Awards and

Functus Officio .............................................................................. 453

VIII. Class Certification ............................................................................ 455

IX. Partial Final Awards on the Class Certification Issue ................ 457

X. Notice of Class Determination ...................................................... 458

XI. Management of Class Arbitrations ................................................ 460

XII. Attorneys’ Fee Awards .................................................................... 461

XIII. The Final Award ............................................................................... 462

Contents xxix

XIV. Settlement, Voluntary Dismissal, or Compromise ..................... 462 A. The Benefit to the Class .......................................................... 463 B. Settlement of Claims against the Respondent ...................... 463 C. Attorneys’ Fees and Costs of Class Counsel ........................ 463 D. Procedure ................................................................................... 464

XV. Confidentiality .................................................................................. 465

Chapter 17

UNIQUE ISSUES IN CONSTRUCTION ARBITRATION Albert Bates, Jr., John E. Bulman, Patricia D. Galloway, Neal M. Eiseman,

Herbert H. (Hal) Gray, III, A. Holt Gwyn, John W. Hinchey, Allen Overcash, and Stanley P. Sklar

................................................................................................................................ 467

I. Introduction ...................................................................................... 467 A. Complexity of Construction Process Equals Complexity

of Disputes ................................................................................ 468 B. Number and Classes of Parties and Participants ................. 468 C. Number of Contract Documents .......................................... 469 D. The Overlay of Governmenatal Oversight Requirements .... 470 E. Diversity of Contracting Models and Allocation of

Project Risk ................................................................................ 470 F. Construction Industry Norms and Construction Jargon ... 471 G. Use of Experts and Initial Decision Makers ........................ 473 H. Unique Remedies and Legally Implied Terms and

Defenses ..................................................................................... 475 I. Industry Developments and Trends That Contribute to

Disputes ..................................................................................... 475 J. Overview of Common Construction Disputes ................... 477

1. Defects and Deficiencies ................................................. 477 2. Time-Relaxed and Extra-Cost Disputes ........................ 478

II. Selecting and Vetting Construction Arbitrators .......................... 480

III. Unique Aspects of Administering a Construction Arbitration .... 483

IV. Prehearing Information Exchange ................................................ 485

xxx Contents

V. Unique Issues in Construction Defect Cases .............................. 487 A. Joinder and Consolidation ...................................................... 488 B. Dispositive Motions and Bifucation of Issues ..................... 489

VI. Designing and Conducting a Site Visit ......................................... 491

VII. The Admission of Evidence in Construction Arbitrations ....... 493 A. Fact Witness Conferencing ..................................................... 496 B. Expert Witness Conferencing (Hot-Tubbing or Tandem

Experts) ...................................................................................... 497 C. Chess Clocks ............................................................................. 497 D. Witness Statements .................................................................. 499 E. Procedures for Subcontractor Pass-Through Claims ......... 500

VIII. Construction Arbitration Awards .................................................. 501

IX. Mechanic’s Lien Issues in Arbitration .......................................... 504

Chapter 18

INTERNATIONAL ARBITRATION (Premilinary Matters)

Gerald Aksen, Axel Baum, Robert B. Davidson, James M. Gaitis, Sally Harpole, Richard H. Kreindler, Urs M. Laeuchli,

Lawrence W. Newman, Philip D. O’Neill, Elliot E. Polebaum, and Lucy F. Reed

................................................................................................................................ 509

I. Introduction ...................................................................................... 509

II. Costs—Insitutional Filing and Administrative Fees .................. 513

III. Appointment Process ...................................................................... 513 A. Initial Communication regarding Possible Appointment .... 513 B. Arbitrators’ Determination of Willingness, Suitability,

Fitness, and Availiability to Serve .......................................... 515 C. Arbitrator Disclosures ............................................................. 517

1. IBA Disclosure Guidelines .............................................. 518 2. Due Diligence in Determining Disclosures .................. 520 3. Availability .......................................................................... 521 4. Challenges to Appointment ............................................. 522

Contents xxxi

5. Arbitrators’ Terms of Engagement ................................ 524 6. Changes in Status in the Course of the Proceeding .... 526

IV. Emergency Arbitrators .................................................................... 527

V. Determining Jurisdiction and Arbitrability .................................. 529 A. Challenges to Arbitrators’ Jurisdiction .................................. 529 B. Challenges to Arbitrability of a Party’s Claims .................... 533 C. Formalizing Arbitrators’ Decisions on Jurisdictional,

Arbitrability, and Competence Issues ................................... 535

VI. Comparing Institutional Rules Addressing Costs, the Composition of the Tribunal, and the Tribunal’s Authority over Jurisdiction and Arbitrability Issues ..................................... 536

Chapter 19

INTERNATIONAL ARBITRATION (Conduct of Proceedings)

Gerald Aksen, Axel Baum, Robert B. Davidson, James M. Gaitis, Sally Harpole, Richard H. Kreindler, Urs M. Laeuchli,

Lawrence W. Newman, Philip D. O’Neill, Elliot E. Polebaum, and Lucy F. Reed

................................................................................................................................ 547

I. Preliminary Meetings/Case Management Conferences ............. 547

II. Terms of Reference and Initial Procedural Order ...................... 549

III. Applications for Conservatory or Interim Measures .................. 552

IV. Requests and Applications .............................................................. 554

V. Depositions and Document Production ...................................... 556 A. Depostitions and Witness Statements ................................... 557 B. Document Production ............................................................. 559

VI. Expert Witnesses .............................................................................. 562 A. Party-Appointed Experts ........................................................ 563 B. Tribunal-Appointed Experts .................................................. 563

VII. Written Submissions ........................................................................ 565

VIII. The Merits Hearing .......................................................................... 568 A. Preparations ............................................................................... 569

xxxii Contents

B. Organization of the Hearing ................................................... 569 C. Confidentiality ........................................................................... 573

IX. The Award ......................................................................................... 574

X. Postaward Proceedings ................................................................... 576

XI. Expedited International Arbitration Rules .................................. 579

XII. Comparing Institutional Rules Addressing Interim Measures, Fact and Expert Witnesses, and Confidentiality ......................... 580

Chapter 20

HYBRID ARBITRATION PROCESSES Trey Bergman, Thomas J. Brewer, William H. Levit, Jr.,

Richard R. Mainland, Gerald F. Phillips, and Edna R. Sussman

................................................................................................................................ 591

I. Introduction ...................................................................................... 591

II. Accepting Appointment to Serve in a Hybrid Proceeding ........ 592 A. Ethical Considerations ............................................................. 592 B. Fitness to Serve ......................................................................... 594 C. Disclosure Obligations ............................................................ 594 D. Other Factors Bearing on the Decision to Serve ................ 595

III. The Neutral’s Role in Ensuring the Parties’ Informed Consent to the Process ................................................................... 596 A. Obtaining the Parties’ Informed Consent ............................ 596 B. The Hybrid-Process Agreement ............................................ 597

1. Consent to the Neutral’s Dual Role ............................... 598 2. Description of the Process .............................................. 599 3. Mediation Caucuses .......................................................... 599 4. Evidence to Be Considered in the Arbitration ............. 600 5. Arbitration Hearing Procedure ....................................... 602 6. Institutional Rules and Practices ..................................... 603

IV. Management of Hybrid Hearings .................................................. 604 A. The Mediation Phase ............................................................... 604 B. The Arbitration Phase .............................................................. 606

V. Arbitration Awards in Hybrid Processes ...................................... 607

Contents xxxiii

VI. Hybrid Processes in International Arbitration ............................ 608 A. Accepting the Engagement ..................................................... 608 B. Rules Governing Hybrid Process .......................................... 609 C. Ensuring Enforceability of the Award .................................. 611

Appendix I

GUIDANCE NOTE: ARBITRATION AND SOCIAL MEDIA Thomas D. Halket, Chair, Stephen P. Gilbert, Herbert H. (Hal) Gray, III,

Larry D. Harris, Robert A. Holtzman, William H. Lemons, Peter L. Michaelson, Edna Sussman, Irene C. Warshauer,

and John H. Wilkinson ................................................................................................................................ 613

Appendix II

GUIDANCE NOTE: SECURITY OF AN ARBITRATOR’S ELECTRONIC INFORMATION

Gerald G. Saltarelli, William H. Levit, Jr., and Mitchell L. Marinello ................................................................................................................................ 625

Index

................................................................................................................................ 639