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Number of Arbitrators - What are your thoughts?

Increasingly, the rules of international arbitral institutions (e.g. ICC, ICDR, JAMS, etc.) require the appointment of a sole arbitrator where the parties have not agreed on the number of neutrals. The domestic rules of such institutions do not always mirror a sole arbitrator default (e.g. AAA Commercial Rules default to three arbitrators if the claim is over $1,000,000). Does one arena (international or domestic) have the better approach?

Please provide your thoughts/comments below.

Comments (12)

It varies from case to case. Frequently, the amount in controversy does not justify the appointment of three arbitrators. Even when it does, the parties should still ponder whether a single arbitrator will serve equally well. This is something that should be addressed in the drafting of the agreement to arbitrate.

One arbitrator should be able to adjudicate all but the most complex of disputes.

If it can be justified by the size of the case, I believe three arbitrators are usually better than one for at least two reasons: it leads to a better result (one arbitrator is more likely to miss something or simply get it wrong); and (b) it allows for division of labor in allocating research and writing tasks, thus promoting efficiency.

David Blair:

There is strength in numbers. When I was a younger arbitrator, I wanted to serve solo - "the extra hands just slowed me down." Now that I'm older, I see the value of enhanced deliberation & consideration of different perspectives on the same case. More is better - doing it on the cheap is not the highest value in life, law or arbitration.

Jose W Cartagena:

Considering the cost and scheduling difficulties in three arbitrator arbitrations, I would vote for a default single arbitrator appointment unless the parties are willing to spend the money and time and agree otherwise.

Let's face it, 3 arbitrators cost a lot Parties who are sophisticated enough to agree to arbitration should be presumed to know what is best for them and even in a case that involves a lot of money, in fact especially in such a case, if parties want a three arbitrator panel, they would know enough to specify accordingly in the arbitration clause. Defaulting to 1 arbitrator makes sense because it implies that the institution, AAA, JAMS, CPR etc. isn't going to saddle the parties with a costly scheme unless the parties agree otherwise. In other words, a default for 1 arbitrator signals cost awareness. That's another way of saying that the institution respects the desire of parties to keep cost under control.

When parties draft contracts with arbitration agreements, they often cannot predict whether any future dispute will be simple or complex or will be large or small. Therefore where the parties (understandably) do not specify a number of arbitrators pre-dispute, there should be flexibility once the dispute arises. The AAA approach provides that kind of flexibility.

Adrian Bastianelli, a construction lawyer and arbitrator from Washington DC, has suggested the alternative to either a single arbitrator or a panel of three is a panel of two, with one of the panel members having a tie breaking vote. In Adrian's experience, which mirrors mine, it is rare for there to be a dissenting award. Since consensus awards are the norm it is unlikely the tie breaker will be used often. Of course, two is cheaper than three, with the added benefit of not putting all your eggs in one basket. I like to call this the "Bastianelli Solution"

Robert Echols:

It seems logical and appropriate to select 3 arbitrators to serve on complicated and sophisticated cases when the stakes are very high and the money demands are too. Having to pay for 3 arbitrators rather than one sitting on the arbitration panel is more expensive, but in my opinion there is certainly less chance of an error or oversight with 3 experienced arbitrators examining the evidence presented at the arbitration hearing, along with the facts and the law controlling the case than one arbitrator handling everything by him/her self. In our legal system we have 3 appellant judges sitting on appeals in each of the 12 circuits reviewing opinions made by the trial judge and jury in the federal District Courts and even more,9 Supreme Court Justices, reviewing the decisions made by the lower Circuit courts. Of course, as previously stated, the amount in controversy makes a big difference.

Dani Schwartz:

Generally, having three arbitrators instead of one increases costs by more than a factor of 3, a fact that is important to keep in mind. That said, increased costs on that scale may be a drop in the bucket for a very large dispute. I think flexibility is the watchword on this issue, and I agree that AAA's approach embodies that.

scott link:

In Texas we have a saying; One riot , one Ranger. One arbitrator is sufficient unless it is a highly complex case with potential damages in excess of $5,000,000. Then a three member may be necessary with one arbitrator handling all the discovery issues with the ability to consult with fellow panel members if needed. In short, it is case specific.

Judge William G Bassler:

I agree with the comments that three is better than one but three is not justified where the amount in controversy doesn't justify the expense.

I have decided not to accept solo appointments.
In fact I have in the past suggested that because of the amount , the parties should agree on waiving 3 in favor of 1 .

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