By Hon. Melvin L. Schweitzer
Assume both parties to a contract include an arbitration clause because they want to avoid protracted, public litigation in the courts of any disputes that may arise between them. If the time ever comes to avail themselves of the arbitration for which they opted, they will also be picking one or more arbitrators. If the arbitration clause is a relatively bare bones one, they will have maximum latitude in selecting arbitrators and one of their options will be to select a retired judge.
Retired judges are a fast growing constituency of jurists which, as a result of mandatory retirement, seemingly exceed the number of judges that continue to sit on the bench. Do the parties seek one out, or pass them by? Better yet, should they have more carefully crafted their arbitration clause to include many of the procedural matters that might stem from such a selection? The brief overview which follows addresses some of these questions which should be seriously considered before one puts a contract and its arbitration clause to bed.
The decision to arbitrate a dispute favors a process that the parties want to "own". They undoubtedly wish to avoid the many formalities of a prolonged legal imbroglio with its dilatory motion practice, intermediate appeals, extensive and expensive pre-trial discovery, evidentiary legal disputes, and, of course, the often interminable wait for a decision to be rendered.
They want a more economical and efficient forum which will more closely comport with their notions of justice than is often encountered in a court of law. And yet, unfortunately, at the end of the day, many who have gone through an arbitration find that they have spent just as much time and money as they would have had they been in a full blown litigated proceeding. So why consider adding a judge to the mix -- the very embodiment of everything they sought to avoid in the first place? Their answer should be because selecting the right judge has the potential to add real value to their arbitration.
The right judge is one who fully appreciates that an arbitration is very different from the court proceeding he or she presided over from the bench. Such a judge has left his or her robe in the robing room in favor of what essentially is the parties' proceeding - a creature of contract and of relative informality and notions of fairness. There is a story to be told through the introduction of documents and examination of witnesses to be sure, and each party is to be afforded the right to challenge the other side's evidence so that conclusions may be drawn in relatively short order. But, theoretically, this all should be conducted in the absence of voluminous motions, without adherence to the formal rules of evidence and with a minimum of the procedural hurdles that litigants in a court of law often encounter at every turn.
It is quite likely that should they decide to go with a judge as an arbitrator their arbitration will indeed result in a somewhat more formal proceeding. But that, of itself, is not a bad thing. The important factor is whether the judge's style and approach will be balanced and responsive to the parties' needs, desires and objective notions of fairness.
Another interesting aspect of choosing such an authority figure is whether the judge has a history of skill in mediating disputes. Both sides may want to try to resolve preliminary issues -- if not the entire dispute -- either before they go to a full blown arbitration hearing or during one. Some judges have had vast experience and talent in doing just that both from the bench and in chambers. This is an area that could readily be contemplated in a well-crafted arbitration clause to expressly give the arbitrator this authority. To be sure, this rather unorthodox approach places the ultimate trier of fact in a position to know what both sides ultimately are looking for, and for that reason they may not feel comfortable with such a procedure. On the other hand, they may feel that this is precisely why they would like an experienced judge to be a participant in their process. If the mediation does not work out, they may trust the right judge to intellectually divorce himself or herself from what has been revealed and to proceed dispassionately with the arbitral process. And who knows? If the mediation is tried and is successful, the participants will have saved untold time and money.
Turning to the arbitration itself, whether the judge they consider actually tried cases or only heard appeals can sometimes make a difference depending on what will be at issue in the arbitration. Since most arbitrations turn on evaluating witness testimony and credibility, a trial judge often is the better choice in such instances. But where the facts are relatively straightforward and the dispute is more likely to turn on the law, either an appellate judge, or a trial judge who presided in a heavy motion part may be the best fit.
Discovery, of course, is an area that commands the parties' attention - not only in the selection of an arbitrator, but again perhaps in the arbitration clause itself. As pertains to arbitrator selection, it is important to assess the dispute at the outset and to establish appropriate parameters for both document production and depositions. Judges are experienced at managing this process, forging compromises between the parties that will make sense for those concerned - all with a firm hand and an eye toward moving this essential aspect of the proceeding along before it gets bogged down such that it can overtake the entire matter.
Be it a dispute over search terms for documents, or the number and duration of depositions, experienced judges have been in the thick of these issues throughout their careers. In an arbitration, their presence and guidance can avoid a log jam that otherwise would add months to the process - precisely what the parties want to avoid. Again, a well-crafted arbitration clause might very well be of assistance in this process by placing a time-limit on the discovery process and addressing the number and duration of depositions and the manner in which document production will be conducted.
When it comes to hearing-related issues, depending upon the nature of the case, an authoritative hand also can guide the parties to a more efficient proceeding. For example, in a major document case, there is the care with which exhibits are arranged and organized which can save valuable time at the hearing. Judges are accustomed to working with exhibit notebooks in which all exhibits are pre-marked and indexed for speedy reference in the hearing itself. In simpler cases, this may not be necessary at all. Working with counsel to reach reasonable agreements, with a measure of firm leadership when necessary, can ultimately be the difference between a smooth hearing or a messy donnybrook.
Another essential element is the scheduling of the hearing. A hearing scheduled for consecutive days will avoid the problem of sporadic hearing times, forgotten testimony, repetitive rehashing of what has already been covered--all of which leads toward inefficiency and greater expense. Here, again, the authoritative posture of the judge when adjournments and postponements are sought can be of great assistance to both sides and avoid a proceeding that drifts endlessly to an exhaustive and incoherent conclusion. Inclusion of a scheduling provision in the arbitration clause might add some teeth to the judge's authority in this regard.
When it comes to witnesses, an experienced judge can shorten the process. An increasing number of judges today prefer to have a witness's direct testimony offered in written form ahead of the day of the hearing so he or she will have read what the basic story is and thereby save the time of counsel having to lead his or her witness through the background, when the guts of the dispute will be flushed out on cross-examination and liberal redirect. Some judges that subscribe to this approach will nevertheless allow brief overview testimony on direct which summarizes the written product so that the witness is "warmed up" a bit before having to face cross-examination. This is also the mark of an understanding jurist who will want all witnesses to feel at ease in the more informal proceeding. The way direct testimony will be taken is yet another subject worth considering for the arbitration clause.
Having talked about exhibits and witnesses as places where a judge's firm hand can speed the process along, another area is the rules of evidence. Lengthy arguments over the finer points of evidence and hearsay have no place in an arbitration proceeding. The rule of thumb of an experienced jurist serving as an arbitrator should be to "let it in" and save the time and expense of protracted in limine motion practice. After all, there is no jury and the judge is perfectly capable of separating the wheat from the chaff when it comes time to make a judgment on witness credibility and the story as a whole. A provision in the arbitration clause which expressly excludes rules of evidence from controlling would clarify an issue that often seems to bog down an arbitral proceeding.
Another place where an authoritative jurist can be useful when it comes to testimony is the rambling witness. A firm hand to keep the questioning and answers focused is something an experienced judge is accustomed to enforcing. Nevertheless, the watchword again is to ensure that the hearing is a fair one and that the parties have a full opportunity to present their case. All decisions must be guided by that principle.
With all these issues to address in order to fulfill the perceived attributes of the arbitral process, such as speed, efficiency, less formality and economy, one can readily see that there is indeed a place for former judges as arbitrators to employ their authoritative experience and demeanor to keep things moving toward a swift and economical conclusion. The caveat, once again, is that the judge who is selected must be one who fully appreciates that arbitration is not litigation before the judicial branch of government, but rather the product of a private agreement between the parties which is designed to cater to their needs and their ideas of how the proceeding should be shaped and conducted.
This checklist of some of the areas to be considered for inclusion in that private agreement certainly can be a foundation for a still broader array of subjects to be covered. And the judge that recognizes the significance of this private agreement and takes the appropriate steps to facilitate it as the arbitrator is the one that will be seen as adding real value to what is truly the parties' arbitration. Such a jurist certainly deserves their serious consideration for selection.
Hon. Melvin L. Schweitzer is a retired Judge of the New York Court of Claims and Acting Supreme Court Justice in the Commercial Division, Manhattan. He now conducts an Arbitration and Mediation Practice as Melvin L. Schweitzer, LLC and also is Counsel to the firm of Liddle & Robinson, L.L.P.