Getting What You Ask For: The Parties Rule in ADR

Getting What You Ask For: The Parties Rule in ADR
January 20, 2015 Gary

There’s an ongoing debate in ADR circles as to what takes priority: arbitral efficiency or party autonomy. To put it more simply, is it more important to have a speedy, low cost arbitration or is it more important to give the parties what they ask for?

You’d think there wouldn’t be a tension between efficiency and what the parties ask for but sometimes there is. And what’s the right answer? The right answer is you get what you ask for. Almost always.

Sure, parties select ADR because they want a dispute resolution process that is quick and cost-effective but when a dispute arises each side wants to do what it takes to win. To litigators accustomed to handling court cases that means asking for discovery, motion practice and a full-scale trial. That’s ok if that’s what both sides really want.

But let’s put it in perspective. That’s not what arbitration is meant to be about. And Arbitrators shouldn’t encourage it.

In practical terms, there is often a disconnect between what the corporate lawyers contemplated when they drafted the underlying agreement and what the arbitration counsel handling the case think needs to be done. What’s an Arbitrator to do?

One option is giving arbitration counsel everything they ask for, even if it means sacrificing the benefits of arbitration. The other option is insisting on an expedited proceeding even if arbitration counsel complain there is no way they can properly put on their case in the short period of time allocated. The right answer isn’t clean cut.

Every Arbitrator has their own perspective – and its important to know where he or she stands. In my opinion, it’s critical that Arbitrators don’t second-guess counsel. That means, where counsel agree, giving counsel what they ask for, even if it means the case might take a bit longer or be a bit less efficient. A good Arbitrator will encourage efficiency but, in the end, respect the view of counsel handling the case and, generally, allow discovery that is jointly requested.

An Arbitrator who refuses to give the parties the discovery they jointly request isn’t helping anyone. Rather, that Arbitrator is imposing on the parties a process they don’t want.

What if counsel for the parties disagree on what is necessary? That’s an easier question, at least in terms of the standard to be followed. In those cases, the expectations of the parties, as expressed by their agreement and standard arbitration practice, dictates the outcome. Where there is disagreement, the arbitrator should allow what is reasonable, finding a balance between expediency and what is necessary for the case.

An Arbitrator whose knee-jerk reaction is to give one side discovery where the other side opposes it isn’t helping the process. Reasonableness, expectations and efficiency should prevail.

International disputes are a special case. Some discovery may be expected in US cases; it is rarely, if ever, expected in international arbitration cases. Unless it is provided for in the arbitration agreement or both parties request it, it would be quite exceptional to have depositions or other US discovery in an international arbitration, particularly where non-US parties are involved.

We say party autonomy governs the process – but who speaks for the parties? Sometimes what in-house counsel expect and what arbitration counsel request are two different things. Arbitrators should encourage communication between clients and counsel but not intrude on the relationship. When arbitration counsel report that their clients want discovery, the Arbitrator should respect their relationship with their clients and take their word for it.

One of the benefits of arbitration is that Arbitrators are not Judges. They are not confined to a single process. In arbitration, the parties define the process. Good Arbitrators encourage efficiency, offer suggestions and help counsel develop a process that is expedient, cost-efficient and practical. Where the parties agree on a reasonable process- the parties should get what they ask for.