This is a small business guide to the default method of arbitrator selection under the American Arbitration Association (“AAA”) Commercial Arbitration Rules and Mediation Procedures (the “AAA Commercial Rules”, available here). It picks up where our most recent article—a small business guide to the first few days of an AAA arbitration—left off.
Like our most recent article, it assumes there is a business-to-business dispute governed by AAA Commercial Rules, the parties’ agreement does not prescribe an arbitrator selection regime, and that the AAA has sent the parties a list of potential neutral arbitrators under AAA Commercial Rule R-13.
Arbitrator selection is one of arbitrator’s most important features. More than 20 years ago, U.S. Circuit Judge Richard A. Posner (ret.) explained that the “cornerstone of the arbitral process” was the “[s]election of the decision maker by or with the consent of the parties. . . .” Lefkovitz v. Wagner, 395 F.3d 773, 780 (2005); see also Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 668, 670 (2010) (one of the FAA’s “rules of fundamental importance” is parties “may choose who will resolve specific disputes”) (emphasis added; citations omitted).
An AAA-proffered list of arbitrator candidates is not routine paperwork. The business should treat arbitrator selection as a major strategic decision, begin promptly the process, and work closely with experienced arbitration counsel in an effort to ensure informed, deliberate choices are made throughout it.
The arbitrator will manage the proceeding, resolve discovery and procedural disputes, hear the evidence, apply the governing law and contract, and ultimately decide who wins and what relief, if any, should be awarded to whom. In most cases, judicial review of the resulting award will be extremely limited.
Given the stakes, the parties are likely to disagree on who an ideal candidate should be.
So what should a business do when it receives an AAA list of arbitrator candidates? Continue Reading »
