JAMS ADR Blog by Chris Poole
Much has been written in recent years about whether arbitration has lived up to its billing as a “better, faster, cheaper” alternative to litigation. No matter one’s views about this, litigation is undoubtedly very costly, and wise counsel must look for ways to reduce unnecessary costs and time delays. Unlike litigation, arbitration affords the parties much control over the process, including the selection of the arbitrator, arguably the most important decision in the process.
Also unlike litigation, if parties are unhappy with the decision of the arbitrator, there is very little recourse, because a fundamental tenet of arbitration is finality. Grounds for vacatur are limited, and unless the parties have selected an appellate arbitration remedy, the arbitrator’s decision will likely not be overturned. Therefore, selection of the arbitrator is a critical step.
Institutional rules generally provide a process for selection of the arbitrator if the parties cannot agree amongst themselves, often by use of a “strike list,” where several arbitrators are proposed and parties are permitted to strike names until an acceptable arbitrator remains. Matters calling for a tripartite panel are handled differently, as each party usually selects its own party arbitrator (assumed to be neutral, but the parties can agree otherwise), and those two arbitrators select a neutral chair. Having three arbitrators on the arbitral panel can alleviate the concern that a single arbitrator may not apply the law correctly and can justify the additional cost.
Whether the matter is to be determined by a sole arbitrator or a tripartite panel, there are important considerations to keep in mind in selecting the tribunal. First and foremost, counsel should review the language of the arbitration clause, as it often dictates the qualifications of the arbitrator. Second, counsel should review the arbitration laws of the place where the tribunal will sit. Certain jurisdictions have restrictions regarding the nationality of members of domestic arbitration tribunals. Beyond that, what should counsel look for when selecting an arbitrator, and how should those qualities be investigated?
Above all, parties want to select as their arbitrator someone who is familiar with the law and has a track record of fairness. Certain disputes require someone with significant subject matter expertise (e.g., patent disputes, engineering and construction, entertainment, employment), so it is important to review the background and prior caseload (whether as a former judge, arbitrator or practitioner) to determine whether the proposed neutral has the requisite background to understand the unique facts and legal issues at stake.
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