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Non-Neutral Arbitrators - What are your thoughts?

What are some of the practical differences in the manner in which an arbitration proceeding is conducted, and/or deliberations by the panel are handled, when one or more of the arbitrators on a panel are non-neutral (i.e., a Canon X arbitrator)?

Please provide your thoughts/comments below.

Comments (5)

John Diaconis:

Party-appointed, nonneutral arbitrators are often required in ad-hoc insurance and reinsurance arbitrations. In those situations, the umpire or chair of the panel is neutral. Generally speaking, there is a high level of communication between counsel and the party-appointed arbitrator, at least prior to hearing. Canon X permits these communications in certain AAA arbitrations. Disclosure of intention to communicate with the appointing party is required. A practical problem may arise when one side is not familiar with the bounds of this relationship. Anyone on unfamiliar turf should acquaint themselves with the proper extent and nature of these ex-parte communications. It's useful also to discuss at the preliminary conference and spell out proper bounds in the initial scheduling order.

Neutrality v advocacy is an interesting issue. The practical implications are many! Under some arbitration regimes advocacy seems to be the norm. Neutrality is more reasonable and practical. The arbitrator should make his or her decision solely based on the information he receives during the arbitration. The difference is clear and can be easily detected during deliberations where the advocate seems to "need" to come back with something for his or her appointing party/client. Deliberations are more open with less tension when the entire panel is neutral. The impact on the process is also easy to uncover. Motions are more numerous in a panel of two advocates and one neutral as opposed to a panel composed of three neutrals. I believe that the neutral panel is more in concert with the intent of arbitration which is to let industry individuals resolve legitimate differences arising during or after the execution of a commercial agreement. Advocacy creates a competitive atmosphere between the panel members which on occasion provides a disservice to the parties.

Non-neutral is useful to establish the issue parameters. The non-neutral has to abide by the AAA canons, no exceptions. Otherwise, the non-neutral will be pushed aside as an advocate making the process unwieldly and the likelihood of wasted time to hear “speeches” from the non-neutral. The Neutral’s job becomes harder exponentially and the arbitration might risk set aside by a court.

It depends on the ethics of the non-neutral to adhere to a neutral proceeding.

In a Cannon X arbitration the non-neutrals are quasi-advocates and are directly or subtly lobbying the Umpire for their appointed party's position. I agree that there is a greater propensity of motion practice in these arbitrations and most rulings are 2 to 1. The neutral Umpire takes on a more complex and difficult role since that person is truly the one who tips the scales and is therefore caught not only between the two parties' paid advocates, but also between the two wing arbitrators.It is a balancing role. Developing consensus is the goal, but rarely reached.

Stephen D Kramer:

It has been many years since I have been a party-appointed arbitrator or since I have been part of a panel in which I was the only neutral, it being understood that my cases are almost always of a non-specialized nature. If my experience reflects a trend toward appointment of arbitrators with knowledge and experience in the law and practices of specialized industries without regard to the position that an arbitrator may take, this may soon become a non-existent problem. Again, based upon my experienced, the parties are better served by industry-savvy neutrals than by a party-appointed non-neutral every time.

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