The American Arbitration Association recently updated its Construction Industry Arbitration Rules and Mediation Procedures, effective July 1, 2015.  There are six new rules, some of which are borrowed from litigation procedures.  Highlights of the revisions include:

• Mandatory mediation.  Under revised Rule R-10, mediation is now mandatory for claims exceeding $100,000 if the underlying contract requires mediation.  Where the underlying contract does not include mandatory mediation, a party may unilaterally opt out.  Mediation will occur concurrent with the arbitration. 

• Dispositive motions.  New Rule R-34, titled Dispositive Motions, permits the arbitrator to dispose of all or part of a claim upon motion of a party.  A party must seek the arbitrator’s consent before submitting a dispositive motion.

• Emergency relief.  New Rule R-39, titled Emergency Measure of Protection, introduces the concept of preliminary injunctive relief to the arbitration process.  Rule R-39 works as follows:  a party seeking emergency relief submits a written request via email or facsimile to the AAA.  Within one (1) business day, the AAA appoints an “emergency arbitrator.”  Within two (2) business days of the appointment, the emergency arbitrator establishes a schedule for the emergency application for relief.  The parties’ positions are thereafter heard via telephone or videoconference, or upon written submissions.  An interim award granting the requested relief may subsequently be entered, with or without tender of security, and the emergency arbitrator’s authority expires upon appointment of the permanent arbitral panel.  

• New consolidation and joinder procedures.  Revised Rule R-7 establishes deadlines for when requests to consolidate arbitrations must be submitted and establishes a framework for handling party joinder.  All requests for consolidation or party joinder must be submitted before the appointment of an arbitrator or within 90 days of when the AAA determined that all administrative filing requirements were satisfied, whichever is later.  For parties contesting consolidation or joinder, oppositions must be submitted to the AAA within 10  days (consolidation) or 14 days (joinder) after the AAA issues notice of such request.

• Enforcement and sanction power of the arbitrator.  New Rule R-25, titled Enforcement Powers of the Arbitrator, defines the authority of the arbitrator in handling pre-hearing activities.  Under the new Rule, the arbitrator may allocate the costs of document production among the parties.  The arbitrator is now also expressly authorized to draw an adverse inference, exclude a party’s submissions or evidence, or make an interim award of costs when that party does not comply  with an arbitrator’s pre-hearing directive.   

New Rule R-60, titled Sanctions, grants arbitrators broad powers to sanction any party that fails to comply with its obligations under the Rules or with an arbitrator’s order.  The arbitrator may not issue sanctions sua sponte, and must provide the party against whom sanctions are requested with the opportunity to respond.

• Information exchange measures.  Rule R-24, formerly titled Exchange of Information, has been renamed, Pre-Hearing Exchange and Production of Information.  Under the revised Rule, a framework is set forth to handle electronically stored data.  The new rule authorizes the arbitrator to establish the search parameters  for e-discovery “to balance the need for production of electronically stored documents . . . against the cost of locating and producing them.” The AAA has characterized the intent of the new language as an effort “to give arbitrators a greater degree of control to limit the exchange of information, including electronic documents.”

• New preliminary hearing rules. A checklist of topics to be addressed at the preliminary hearing is a key feature of these new rules.

The AAA has been active in revising its Construction Industry Arbitration Rules and Mediation Procedures in recent years.  This latest step in AAA’s course of adapting its rules in response to industry feedback contains several significant changes that are sure to alter how construction arbitrations are conducted. Whether implementation of these new arbitration functionalities results in further realization of the AAA’s stated purpose of facilitating efficient and economical resolution of disputes will be determined by how participants conduct themselves in this newly expanded arbitration forum.