The American Arbitration Association (“AAA”) issued new Arbitration Rules and Mediation Procedures governing commercial disputes for AAA commercial arbitrations initiated on or after October 1, 2013. Arbitration proceedings filed prior to October 1, 2013 continue to be governed by the Arbitration Rules & Mediation Procedures amended and effective June 1, 2010. There are a number of significant changes to the Commercial Rules, many of which appear designed to add increased flexibility to the parties and retain arbitration’s promise of a streamlined, cost-effective alternative to traditional litigation. Some of the more notable changes include:
Rule 9 now mandates mediation in any arbitration with a demand > $75K (though either party can opt out). Any party contemplating filing an arbitration demand should be prepared to make a determination about the utility of mediation, as that question will be raised by the AAA and the arbitrator shortly after the initial filing.
Rule 22 places limits on discovery, including to documents “relevant and material to the outcome of the disputed issues” – a standard arguably more stringent and narrow that FRCP 26(b). Rule 22 also limits surprise to the parties by requiring each party to produce documents upon which it intends to rely at the hearing. Further, it allows the parties and the arbitrator to set “reasonable search parameters” prior to the exchange of electronic documents.
Rule 38 codifies the old Optional Rules for Emergency Measures that used to have to be specifically agreed to by contract – they should be available in any arbitration now. Previously, if not agreed to in any relevant contract, parties often had to initiate multiple actions in Court and Arbitration to obtain emergency relief.
Rule 58 expressly authorizes the arbitrator to issue “appropriate sanctions” for failure to comply with the rules or the Arbitrator. Absent such a rule, some arbitrators in the past had been reluctant to sanction any party, no matter how egregious the conduct. Rule 58 and Rule 23 should be read in tandem as Rule 23 likewise authorizes the arbitrator to issue sanctions and penalties necessary to ensure compliance with the arbitrator’s orders, the AAA rules, and the parties’ discovery obligations.
For a complete discussion of the changes, both major and minor, please refer to Foley’s chart, including suggested practice “takeaways” related to each new and revised rule.