Introduction: Treat the AAA Demand as a Legal Proceeding, Not Routine Business Mail
Received an American Arbitration Association (“AAA”) arbitration demand? Wondering what to do?
The short answer is: contact experienced arbitration counsel immediately. Do not put the arbitration demand in the same pile as ordinary contract correspondence, and do not wait to see what happens next. An AAA commercial arbitration is an adjudicative proceeding that can end in a final, binding, confirmed award fully enforceable in court. Important deadlines can begin running as soon as the AAA sends notice that an arbitration demand has been filed.
This article assumes a business-to-business contract calling for AAA arbitration under the AAA Commercial Arbitration) Rules and Mediation Procedures (eff. June 1, 2026) (the “AAA Commercial Rules,” available here). It assumes the dispute is not subject to the AAA’s Expeditated Procedures or its Procedures for Large, Complex Commercial Disputes.
A respondent (i.e., a person against whom the arbitration demand is made) ordinarily has 14 calendar days after the AAA sends notice of the filing of the demand to file an answering statement. If no answer is filed, the claim is deemed denied, but the arbitration continues. AAA Commercial Rule R-5(a). Do not treat that deemed denial as permission to ignore the deadline, because other objections may have to be raised at or before the answer.
There is also an important timing wrinkle. Under Rule R-4, the claimant sends the respondent a copy of the demand when the case is filed, but the AAA separately notifies the parties when its administrative filing requirements have been satisfied. AAA Commercial Rule R-4(b)(iv). The Rule R-5 answer period runs from the AAA R-4(b)(iv) notice, that is, from the date the AAA notifies the parties that the its administrative filing requirements have been met. AAA Commercial Rules R-5(a).
Counsel should identify the operative AAA notice and calendar every deadline that runs from it. If you have the claimant’s papers but no AAA notice yet, get organized now rather than later.
Why it is Important to Get Counsel Involved Immediately when You Are Served with an AAA Arbitration Demand
AAA Rule R-27 permits a party to appear through counsel or another representative, subject to applicable law. The more important question is not whether the business entity can try to handle the matter itself (a matter that independently raises important legal questions), but whether it should. Arbitration moves quickly, the governing contract may modify the default AAA procedures, and strategic choices made at the outset can affect jurisdiction, defenses, counterclaims, arbitrator selection, discovery, settlement leverage, and cost.
Further, depending on the facts and circumstances, your business may be entitled to stay arbitration based on certain grounds, and to preserve its rights, it may need to make such a motion in Court within 20 days (or another very short period) after being served with a notice of intention to arbitrate. See New York CPLR 7503 (b) & (c); see also recent ALF post. Such service might be accomplished before the AAA notifies that administrative filing requirements have been satisfied.
In this respect, one AAA Commercial Rules deadline is particularly important. Rule R-7 gives the arbitrator power to rule on objections concerning the existence, scope, or validity of the arbitration agreement and arbitrability, and says those objections must be made no later than the answering statement to the claim or counterclaim that gives rise to them.
These kinds of objections, however, may overlap or conflict with objections that you might have the right, subject to timing considerations, to bring in court via a motion to stay arbitration. Coordinating the complex court versus arbitration issues that might arise requires legal skills and arbitration-law experience.
Whether a court, the arbitrator, or both may need to address a threshold issue can be legally complex and mistakes may lead to waiver or forfeiture. The practical point is simple: if your company, for example, never agreed to arbitrate, the wrong entity was named, or a claim may fall clearly outside the applicable arbitration agreement, , counsel should evaluate that immediately and recommend how best to deal with it procedurally. Do not assume the issue can safely be raised later.
Start With the Contract – Not Just the Demand
Give counsel the entire contract, not merely the arbitration clause. Include amendments, exhibits, purchase orders, incorporated terms, guarantees, assignments, side letters, and later agreements that may have altered parties’ rights. The clause may specify locale (i.e., situs), arbitrator selection, governing law, discovery limits, fee allocation, negotiation or mediation prerequisites, or other procedures that differ from AAA defaults. Under Rule R-1, the AAA Commercial Rules generally become part of the agreement when the contract calls for AAA arbitration under those Rules, but the parties may vary them by agreement.
Counsel should also compare the Demand with the contract and the transaction. Is the claimant the party that signed the agreement? Is your company the correct respondent? Do the claims arise from the contract containing the arbitration clause? Is another agreement potentially controlling? Has the claimant demanded relief that the contract may not authorize? These are ordinary business facts, but they can have important arbitration consequences. Those consequences may include, among other things, losing the right to raise objections designed to preserve post-award vacatur grounds if the arbitrators make an adverse award against the business.
Preserve Evidence Now
Treat the Demand much as you would treat the filing of a lawsuit for document-preservation purposes. Identify and preserve relevant contracts, emails, text messages, accounting records, invoices, purchase orders, project files, electronically stored information, and other records. Suspend routine deletion or auto-delete practices that could interfere with preservation of relevant material, which you may need to establish your defense or to defend a claim for spoilation of evidence. Identify the employees and former employees who know the facts. And it goes without saying: Do not edit, “clean up,” or reconstruct documents.
At the same time, coordinate substantive communications about the dispute with counsel. A hurried, ill-advised email to the claimant purporting to “explain what really happened” can (and probably will) be used as evidence against the business. Internal communications created without legal guidance may also result in waiver of otherwise applicable privileges. The goal is not to stop normal business operations but to ensure that the company responds deliberately, preserves the record it may need to defend itself and assert counterclaims, if any.
Calendar the Other Early AAA Deadlines
The answer period is not the only early deadline. Situs-related disputes are to be decided initially by the AAA and ordinarily must be raised within 14 calendar days after the AAA notice of filings, unless the AAA sets another date. AAA Commercial Rule R-12. If the AAA sends a list of potential arbitrators under Rule R-13, the parties ordinarily have 14 calendar days to strike names, rank the others, and return the list. If a party does not return the list, the candidates can be treated as acceptable. These are short periods for decisions that can materially affect the case. Familiarize yourself with all of them and consult with counsel to ensure timely and effective compliance.
The Rules permit extensions in appropriate circumstances: Rule R-43 allows the parties to modify many time periods by agreement and allows the AAA or arbitrator, for good cause, to extend many Rule-based periods. But just as it is in a litigation, a business should never assume an extension will be granted. Ask early if more time is genuinely needed, and support your request with good cause.
Think About Counterclaims, Insurance, and Emergency Issues
A small business receiving a Demand should not focus solely on defense. It may have contract, payment, warranty, indemnity, fraud, or other counterclaims arising out of the same relationship. Rule R-5 permits counterclaims after notice of filing, subject to Rule R-6, and a counterclaim requires a filing fee. Counsel should identify potential counterclaims early so they can be evaluated strategically rather than added seemingly as an afterthought.
Also check insurance and indemnity arrangements promptly. Some disputes may implicate liability insurance—including errors-and-omissions and cyber coverage—or contractual indemnification rights. Policies and indemnity provisions usually contain prompt notice requirements, breach of which may result in loss of defense and indemnification rights.
Finally, ask whether either side needs immediate relief. Rule R-38 authorizes interim measures, including injunctive relief and measures to protect property. AAA Commercial Rules R-38. For many non-expedited arbitrations based on agreements entered on or after October 1, 2013, Rule R-39 also provides an emergency-arbitrator procedure before the merits arbitrator or panel is constituted. On a related matter, the AAA Commercial Rules also state that seeking interim relief from a court does not, by itself, waive arbitration. See AAA Commercial Rule R-38(c). If property, money, confidential information, or other interests face immediate harm, counsel should address that at once, and if necessary and available under applicable law, seek judicial injunctive relief in aid of arbitration. See, e.g., New York CPLR 7502(c) (injunctive relief and attachment in aid of arbitration).
Begin Thinking About the Arbitrator and the Economics of the AAA Case
Arbitrator selection is not clerical. The parties’ ability to select or to participate in the selection of arbitrators is one of the greatest benefits arbitration has to offer, and the choice of arbitrator(s) can be highly consequential and in certain cases even outcome determinative.
The parties’ arbitration agreement generally determines how arbitrators are selected, but where the parties’ agreement does not address that topic, then the default provisions of AAA Commercial Rule R-13 apply. See AAA Commercial Rules R-13 – R-17. R-13 provides for the AAA to supply a list of 10 AAA National Roster arbitrators to the parties, who are supposed to either agree to one of them or to strike an AAA-prescribed number from the list. Based on the arbitrators remaining on the lists, and in accordance with the parties’ preference rankings, the AAA is directed to “invite the acceptance of an arbitrator to serve. . . .” AAA Commercial Rule R-13(b). In the event the parties do not agree on who should serve, if acceptable arbitrators cannot act, or there is any other reason an appointment from the list cannot be made, then the AAA is empowered to make the selection from the National Roster without the parties submitting additional lists. AAA Commercial Rule R-13(b).
Before a list arrives, counsel and the business should identify what considerations they find most important in selecting an arbitrator for the dispute at hand. That may, for example, be knowledge of the industry, experience with the governing law, legal training, litigation and arbitration experience, other dispute resolution experience, contract type, case-management style, availability, billing rate, potential conflicts, and so forth.
Rule R-13 imposes a 14-day deadline, calculated from the list transmittal date, for the parties to rank in preference the remaining candidates and return to the AAA their strikes and ranked lists. That deadline can pass quickly, especially if the business waits until the list arrives without giving serious consideration to what they are looking for in an ideal arbitrator candidate.
The amount in dispute also affects procedure. Unless the parties agree or the AAA determines otherwise, the Expedited Procedures generally apply when no disclosed claim or counterclaim exceeds $100,000, excluding specified items, while the Large, Complex procedures generally apply when a disclosed claim or counterclaim is at least $1 million. AAA Commercial Rule R-1(b)-(c). This article assumes that the arbitration is not conducted pursuant to either the Expedited Procedures or the Large, Complex procedures, but those procedures can effect deadlines and other matters, and therefore must be consulted if the arbitration is conducted according to them.
The amount in dispute is also an important budgetary consideration. The AAA charges administrative fees, and arbitrator compensation and deposits are separate costs. See Rules R-55 through R-59. Pay careful attention to information concerning these costs, including the AAA’s administrative fee schedule. Arbitration costs may be far higher than you might expect. A realistic early budget can influence staffing, discovery, counterclaims, settlement, and the decision whether to pursue mediation.
Do Not Ignore Mediation or the Preliminary Hearing
When a claim or counterclaim exceeds $100,000, Rule R-10 generally calls for mediation while the arbitration is pending, although any party may opt out by notifying the AAA and the other parties. AAA Commercial Rule R-10. Mediation may still deserve serious consideration even when the company believes it has a strong case. The question is whether a negotiated business resolution offers a better risk-adjusted result than continuing to spend time and money on the arbitration.
If the case does not settle, the preliminary hearing will shape what follows. The AAA’s preliminary-hearing checklist calls for discussion of governing law and rules, threshold issues, document exchange, electronically stored information, cybersecurity, dispositive issues, and scheduling. See Preliminary Hearing Procedures P-1 and P-2. A business that gathers facts, identifies witnesses, and thinks about proportional discovery from day one will be better positioned when the arbitrator asks how the case should proceed.
The First 48 Hours: A Checklist
- Contact counsel experienced in commercial arbitration. Once you find suitable counsel, and have understood and agreed all terms, engage them without delay.
- 2. Identify the AAA R-4(b)(iv) notice notice date and immediately calendar the answer, jurisdiction, situs-related, and any other pertinent deadlines. Share this information with counsel and ensure that both of you are aware of, and prepared to meet, all upcoming deadlines.
- Preserve relevant paper and electronic records and suspend routine deletion practices that could affect them.
- Identify possible threshold objections, defenses, counterclaims, insurance coverage, indemnity rights, and emergency issues.
- Avoid an improvised substantive response to the claimant before counsel has reviewed the facts and the arbitration agreement.
- Begin thinking about arbitrator qualifications, likely discovery needs, business objectives, settlement possibilities, and a realistic budget.
Contacting the Author
If you have any questions about this article, arbitration, arbitration law, or arbitration-related litigation, then you may contact the author, Philip J. Loree Jr. at (516) 941-6094 or PJL1@LoreeLawFirm.com.
Philip J. Loree Jr. is principal of the Loree Law Firm, a New York attorney who focuses his practice on arbitration and associated litigation. A former BigLaw partner, he has more than 35 years of experience representing a wide variety of domestic and international corporate, other entity, and individual clients in trial-court and appellate matters arising under the Federal Arbitration Act—including matters arising under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. He also has significant experience arbitrating and litigating insurance- and reinsurance-related and other commercial disputes, and in advising clients and co-counsel in arbitration-law-related matters.
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Tags: AAA arbitration, AAA Commercial Arbitration Rules, answering statement, Arbitrability, Arbitration Agreement, arbitration deadlines, arbitrator selection, business-to-business arbitration, Commercial Arbitration, counterclaims, Demand for Arbitration, emergency arbitration, evidence preservation, Mediation, small business arbitration
