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Reflections on the State and Future of Commercial Arbitration

by Beth Graham
November 2014 Beth Graham
In Part One of this series, Disputing highlighted a portion of Pepperdine University School of Law Professor Thomas Stipanowich’s research paper entitled “Reflections on the State and Future of Commercial Arbitration: Challenges, Opportunities, Proposals.” In the article, along with its companion piece, “Arbitration in Evolution: Current Practices and Perspectives of Experienced Arbitrators,” which was coauthored by Straus Institute for Dispute Resolution Research Fellow Zachary Ulrich, Professor Stipanowich examines the results of a recent survey of 134 members of the College of Commercial Arbitrators regarding a variety of aspects of commercial arbitration practice in the U.S. and in international disputes.

Here is the second installment in this series:

In Part III of “Reflections on the State and Future of Commercial Arbitration: Challenges, Opportunities, Proposals,” Professor Stipanowich addresses “concerns about arbitration becoming too ‘judicialized,’ too expensive and too lengthy and examines a variety of responses, including a wide range of proactive approaches now employed by experienced arbitrators.” Professor Stipanowich states,

What may be most striking about these developments is that, until fairly recently, cost- and time-saving were often regarded as among the leading potential benefits of arbitration and a primary basis for distinguishing arbitration as an alternative to litigation. The growing prominence of these elements as perceived negatives of arbitration is therefore particularly troubling.

In this section of his article, Professor Stipanowich proposes avenues that may be used “to inform users about ways of promoting cost-effective, efficient arbitration.” His proposals include:

1. Actively promote and put into practice the elements of the CCA Protocols for Expeditious, Cost-Effective Commercial Arbitration and other guidelines.

2. Publish relevant arbitration success stories; encourage arbitration providers to capture and publish statistics on use of streamlined processes, cost- and time-saving.

In Part IV of his research paper, Professor Stipanowich examines issues related to finding and appointing effective arbitrators such as:

(a) identifying and obtaining sufficient reliable and useful information about potential candidates; (b) having a sufficiently diverse pool of arbitrators (both from the standpoint of gender and professional background; (c) concerns regarding the roles and orientations of party-appointed arbitrators on tripartite panels; and (d) the rapidly growing corps of self-described “dispute resolution professionals.”

Professor Stipanowich’s suggestions related to this issue include:

1. Provide better information on neutrals of all kinds, direct to user; promote transparency.

If better, more complete information about the capabilities and skills of arbitrators is made broadly available to potential users, one presumes that those whose skills have been honed by experience will be advantaged. As discussed above,405 there should be active discussion about ways of providing much better information about arbitrators, including some form of evaluations from users; information about substantive and process skills, including the individual’s skills in managing discovery, motion practice, and hearings; their availability for hearings; and their adherence to pertinent legal standards or other standards.

2. Encourage diversification of professional “neutral” practice.

The identity and background of decision makers makes a difference, and our growing understanding of the impact of these elements on process and product in dispute resolution must be communicated and translated into action.

3. Conduct studies to determine the impact of direct party-appointment on arbitrator’s perceptions and interactions. Consider the use of alternative appointment procedures, including screened unilateral selection, to address concerns regarding potential bias.

While tripartite arbitration with party-appointed arbitrators may work reasonably well in many cases, there remain abiding concerns about the biases of party-appointed arbitrators and the dynamics of tripartite panels. This is a subject that is overdue for a straightforward discussion informed by thorough research. Meanwhile, concerned parties have the option of using a screened unilateral selection procedure.

In Part V of his scholarly article Professor Stipanowich “explores and responds to concerns regarding the quality of counseling and advocacy in commercial arbitration.” After discussing the associated challenges, he suggests the following proposals:

1. Continue to develop and promote effective training on counseling and advocacy for in-house and outside counsel.
2. While encouraging students to take part in arbitration moot court competitions, develop other events that emphasize the broader roles of lawyers in arbitration.
3. “Translate” applicable ethical rules (such as, in the United States, the Model Rules of Professional Conduct) into a set of clear guidelines for legal counselors and advocates in arbitration.
4. Develop and promote effective ethical guidelines to address potential conflicts in the system of international commercial arbitration.

For more information about the results of this landmark survey, please read the full text of Professor Stipanowich’s article here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2519084

Biography


Beth Graham received a J.D. from the University of Nebraska College of Law in 2004 and a M.A. in Information Science and Learning Technologies from the University of Missouri in 2006. She also holds a B.S. in Public Administration from the University of Nebraska-Omaha. She is licensed to practice law in Texas and the District of Columbia.



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