Arbitration Chair exclusively handling discovery disputes - What are your thoughts?


Where an arbitration clause requires three arbitrators, should the Chair exclusively handle discovery disputes? Consider also whether the Chair makes this determination sua sponte or the parties request the same. What are the positives and/or negatives of such an arrangement?

Please provide your thoughts/comments below.


Where an arbitration clause requires three arbitrators, should the Chair exclusively handle discovery disputes? Yes, provided that the Parties, counsel and the two wing arbitrators agree to this procedure at the Preliminary Hearing Conference. The Parties should also agree that upon the request of any Party or at least one arbitrator, the decision may be reviewed by the entire Panel. The Positives are the process is more efficient, only one arbitrator need be involved so less time is involved. The process is also much more cost effective. The Cons are that you only get input (initially) from only one of the three arbitrators. Another Con is that if there is a lot of disputes, the Chair is disproportionately providing service and the parties do not get a feel for the other two arbitrators who will be involved in the decision. Another approach, is to have all discover disputes handled by the Chair unless a Party requests that the entire Panel hears the dispute before any decision is made by the Chair.

As a default, I believe the chair should make all discovery rulings without involving the other two arbitrators, regardless of whether they are true neutrals or biased party-appointed. It's quicker and less expensive. However, if the parties agree it should be all three, I'd be inclined to accede to that. Typically the chair at the preliminary conference should raise this issue for discussion, making the point that unless there is agreement to the contrary, the chair alone will rule.

The FINRA arbitration rules provide for this. It is eminently sensible and efficient. Perhaps AAA should consider adopting a similar rule. If not, the commenters above are right in saying it would require agreement, at least by the parties.

Separately: Mr. Purcell says, above, "if the parties agree it should be all three, I'd be inclined to accede to that." I don't understand his use of "inclined". If the parties agree, could he tenably decline?

In smaller cases and where the arbitrators are paid by the hour, I can understand the parties' desire to control costs and have the chair decide; their wishes should be respected. Generally, however, the entire tribunal should make decisions regarding evidence.

The Chair almost always exclusively handles discovery disputes. That is the most cost-effective way to proceed. In large complex commercial arbitrations, the Chair usually consults with the wings and gets their input before making rulings on discovery motions, but it is the Chair, at the end of the day, who makes the decision. This arrangement works, and I have never seen parties objecting to it. The Preliminary Hearing is the time to spell out how discovery disputes will be handled and see if there are any issues.The Case Management Order should also address this subject.

I follow the practice at the outset of asking the parties whether they agree that the Chair should handle all discovery disputes, but always making clear this is a revocable grant of power to the Chair and one party or both parties can always revoke the grant and return the power to the full panel.

Generally works well in my experience particularly where Chair keeps the other arbitrators in the loop and is not hesitant about consulting the other arbitrators when necessary for their views...I assume there is a discovery order in place laying out the parameters for the pre-hearing discovery process and that the parties have a right to go to the entire Panel if they feel a need to do so.

In matters where I have chaired the Panel it has been my practice to first have a telephone conference with the other panel members and seek their endorsement of proposing such a procedure to counsel. If they are in accord I then raise the proposal during the preliminary telephone conference call. In every instance I have secured the consent of my co- arbitrators and of counsel. Everyone has recognized that is the most efficient and cost effective way to proceed.

Use of three arbitrators is always time-consuming and expensive. If the parties agree to that, the arbitrators have no right to refuse it. The resolution of discovery disputes may ultimately decide the whole matter. On the other hand, I can understand the parties deciding, when faced with the actual cost of paying three arbitrators for every hour, that the extra protection is not worth trebling the cost.

In my experience the subject is raised at the preliminary conference by the Chair. I have had situations in large cases where counsel wanted the full Panel to resolve discovery disputes. Usually, and I think the better approach, is to obtain consent for the Chair to handle discovery disputes with the option of counsel or Chair to ask for full Panel decision or a review the Chair's decision. In my experience counsel do not ask for full Panel input or review but often the Chair before rendering a decision will ask for input from the Panel in more complicated disputes where the decision is critical.
It works.

I agree with those who believe the Chair should consult with the other panel members, especially if there is a substantial amount in controversy.

The practice is very good and works well under many International Arbitration Regimes. The option is always available for the Chairman to consult with his/her co-panelists if he/she deems it necessary. In addition the Chairman can and in some instances should keep his/her co-panelists in the loop on important communications regarding the discovery issues before issuing the ruling. On several occasions when I chaired a panel I dealt with discovery motions and had positive reactions from my co-panelists. The practice is economical and helps a panel deal with discovery issues in a more expedited fashion.

I mentioned earlier that FINRA's rules delegate discovery issues to the Chair, and that the system works well. In view of the subsequent comments above, it's worth adding that the FINRA rules also require action by the full panel for sanctions or dispositive motions based on the Chair's rulings. I believe this is a well-thought out approach.

An excess of discovery disputes is one of my biggest concerns in taking on a case. Over the years, I have determined that there is nothing to be gained by participating in the review of a medley of arguments over issues that were often settled at the preliminary conference precisely to avoid wasting time parsing discovery matters.

Let us not forget that not so long ago, the rules (often ignored by arbitrators with a background in litigation) provided for virtually no discovery except for a few interrogatories and an exchange of documentary exhibits just prior to the hearing. The pioneers of arbitration recognized that discovery was the biggest cause of a lack of efficiency in a proceeding with the smallest effect on the results of the hearing. Arbitration and discovery were not dance partners in the early days.

Unfortunately, a party's lawyer often believes that he or she is making a showing of strength by papering a less aggressive attorney with one objection after another and all the discussion and loss of time that goes with it. I have found that bunching discovery issues together so that they can all be resolved in a day by the Chairman for resolution avoids interruptions in the proceeding and turns aggressive lawyers into kittens when they see that they have lost their audience. There is also more consistency in the way issues are settled, and two arbitrators are spared from the risk of learning to hate the attorneys. Those issues that the Chairman does not feel comfortable deciding alone are heard by the whole panel on a second discovery day after first requiring the parties to spend a week together trying to eliminate matters that the panel would rather not have to deal with. The whole process goes more rapidly and smoothly.

Efficiency is also improved by the setting of limits by the panel as to what can be discovered AND STICKING TO THE LIMITATIONS as they should have been set after due discussion at the Preliminary Hearing. The less the panel has to deal with discovery matters, the better, and if that means burdening the Chairman, then so be it.

Generally, the Chair should make decisions on discovery disputes. This is the most cost and time-efficient way to resolve such disputes and keep the arbitration on track for the commencement of hearings by the scheduled date. However, there may be circumstances under which it would be prudent for the Chair to involve the other arbitrators in resolving the issue or soliciting their input. For example:
• The requested discovery seeks the disclosure of matters which the requesting party shows are likely to be or have a probability of being critical to the proof of its claim or defense. The opposing party has asserted credible arguments that disclosure will violate the attorney-client privilege, work product doctrine or some other recognized privilege or rule of law that would prohibit disclosure. This may require a hearing on the merits of the defense or oral argument before the panel, or- at the very least- the Chair’s consultation with the other arbitrators.

• The party requesting the discovery asserts that it is seeking the information to develop facts to support an amended claim or counterclaim. The opposing party makes a credible argument that the amended claim is outside the scope of the arbitration agreement. If the issue of arbitrability cannot be readily resolved and both parties have compelling reasons supporting their respective positions on the issue, the Chair should not proceed without the involvement of the other arbitrators.

I agree completely. I have found that assigning the discovery responsibility to one panel member is most efficient and consistent. I do when I chair a panel and always defer to the Chair when I am not.

The Chairman should raise this issue and make the suggestion to the other two panel members that in order to save time and money he will make all the discovery rulings unless the issue is so complex and/or uncertain that he wishes to confer with the other two members about the ruling. After approval of this procedure by the panel members, he should announce the panel's agreement on this issue at the Preliminary Hearing with the attorneys for the parties.

Ideally, the chair could resolve discovery disputes if he/she keeps the panel members in the loop. However, in complex cases with complicated discovery issues, every member brings experiences to the table For example,, I was a litigant in a large complex case and the Chair was in over his head which resulted in his tirades and poor decisions. The other members of the panel were older and more experienced lawyers and should have been allowed to participate in the decisions. Let the Chair conduct the discovery hearing , but make sure his/her panel members have some input. This will save the litigants some money and result in good rulings.

From my perspective, there are two main issues here. One is getting proper discovery motion decisions. A competent chair should be able to render such decisions. The other issue is cost. Involving the other arbitrators presumably has a cost. One reason to arbitrate rather than litigate is to contain costs.

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This page contains a single entry by Jeffrey Zaino published on April 2, 2017 6:33 PM.

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