E DISCOVERY IN ARBITRATION
By Steven C. Bennett
Prehearing discovery procedures vary greatly in arbitration, depending on the agreement of the parties, the sponsoring organization and its rules, the predilections of the arbitrators, and the circumstances of the case. Parties often choose arbitration in part to avoid some of the cost and burden of discovery devices in ordinary civil litigation. Certain discovery devices, such as interrogatories, bill of particulars, or requests for admission, are almost unthinkable in arbitration. Others, like depositions, are possible but rare.
What has become the norm in arbitration, at least in commercial arbitration in the United States, is the exchange of documents pertinent to a dispute. Essential documents, such as any contract or correspondence between the parties, invoices, and payment records pertaining to the transaction, may be exchanged as a matter of course. More burdensome, time-consuming demands are rare. An arbitrator will weigh cost and delay factors involved in broad discovery more carefully than most judges and magistrates in ordinary litigation.
The AAA's "Commercial Arbitration Rules" (the "AAA Rules") do not specifically address the question of e-discovery. (The AAA's Commercial Arbitration Rules, and the other AAA Rule Sets discussed herein, are generally available at www.adr.org). Instead, the AAA Rules provide an opportunity for a preliminary conference of the parties, with the tribunal, to discuss the "future conduct of the case," which may include discovery issues. Further, the AAA Rules provide that "[a]t the request of any party or at the discretion of the arbitrator, consistent with the expedited nature of arbitration the arbitrator may direct . . . the production of documents and other information;" and "[t]he arbitrator is authorized to resolve any disputes concerning the exchange of information."
In 2008, recognizing a "genuine concern" about the growing use of conventional litigation procedures in arbitration, the International Centre for Dispute Resolution ("ICDR"), the international arm of the AAA, adopted "ICDR Guidelines for Arbitrators Concerning Exchanges of Information" (the "ICDR Guidelines"). The AAA, in announcing the ICDR Guidelines, suggested that these guidelines would be useful both for international matters, under the ICDR's administration, and for "the practice of arbitration as a whole."
The ICDR Guidelines provide that the tribunal "shall" manage the exchange of information "with a view to maintaining efficiency and economy." The tribunal and the parties should "avoid unnecessary delay and expense" while "balancing the goals of avoiding surprise, promoting equality of treatment, and safeguarding each party's opportunity to present its claims and defenses fairly."
Regarding electronic documents, the ICDR Guidelines provide that, when requested, the party in possession of such information "may make them available in the form (which may be paper copies) most convenient and economical for it, unless the Tribunal determines, on application and for good cause, that there is a compelling need for access to the documents in a different form." Requests for electronic information "should be narrowly focused and structured to make searching for them as economical as possible;" the tribunal "may direct testing or other means of focusing and limiting any search."
The ICDR Guidelines provide that, in resolving any disputes about information exchange, the tribunal "shall require a requesting party to justify the time and expense that its request may involve, and may condition granting such a request on the payment of part or all of the cost by the party seeking the information." Further, the tribunal may "allocate the costs of providing information" among the parties, in an interim order or final award.
In January 2010, JAMS also published "Recommended Arbitration Discovery Protocols for Domestic, Commercial Cases" (the "JAMS Protocols"). See www.jamsadr.com. The JAMS Protocols are meant to provide arbitrators with "an effective tool that will help them exercise their sound judgment in furtherance of achieving an efficient, cost-effective process which affords the parties a fair opportunity to be heard."
As to e-discovery in particular, the JAMS Protocols suggest that an "early order" can be "an important first step" in limiting such discovery. Such an order may provide that there shall be e-discovery "only from sources used in the ordinary course of business," not including backup information, absent "compelling need;" that production be made "on the basis of generally available technology in a searchable format which is usable by the party receiving" the ESI (not including metadata other than for email headers); and where the costs and burdens are disproportionate to the "nature and gravity of the dispute or to the amount in controversy," the arbitrator may "either deny such requests or order disclosure on condition that the requesting party advance the reasonable cost of production," subject to allocation.
In 2009, the International Institute for Conflict Prevention and Resolution ("CPR) issued its "Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration." See www.cpradr.org. The Protocol divides cases into categories (called "Modes of Disclosure") from A (no pre hearing discovery, except for the exchange of exhibits to be used by each party at the hearing) to D (relatively full-scale disclosure, which may include discovery of ESI, subject only to limits of reasonableness, avoidance of duplication and undue burden). The Protocol choices are generally for the parties to agree upon, with the recognition that arbitration is not meant to be a "no stone unturned" exercise. Rather, the CPR Protocol states that "disclosure should be granted only as to those items that are relevant and material, and for which a party has a substantial, demonstratable need in order to present its position."
The increasing importance of electronic communications in the conduct of business (and personal) affairs, coupled with these kinds of rules changes suggest that e-discovery may become an increasing feature in arbitration, as it has become in civil litigation. Considerations related to e-discovery may affect arbitration clause drafting, arbitrator selection and the conduct of hearings. Familiarity with e-discovery law and practice will, therefore, serve an arbitration practitioner well. See generally Steven C. Bennett, E-Discovery Issues: What Parties And Their Counsel Need To Know In Anticipation Of And During Arbitration, Disp. Res. J. (2009), www.apps.adr.org/ecenter; Deborah Rothman, eDiscovery: From The Arbitrator's Perspective, Cal. Lit. (2009), www.thecca.net; Richard Posell, E-Discovery In Arbitration, www.mediate.com (2010).
Steven C. Bennett is a partner at Jones Day in New York City and Chair of the firm's E discovery Committee. He teaches a course on E Discovery at New York Law School. The views expressed are solely those of the Author and should not be attributed to the Author's firm or its clients.