By Neal M. Eiseman, Past President, College of Commercial Arbitrators
& Richard H. Silberberg, Past President, College of Commercial Arbitrators
The Aardvark commented in the initial installment of its “Select Your Decision Maker” post that the principal advantage of commercial arbitration is party autonomy and self-determination, as best illustrated by the disputants’ ability to select the person who will hear and decide their dispute. As part of its continuing “debunkery” mission to set the record straight about the advantages that commercial arbitration offers over litigation, the Aardvark asks and answers the following two questions:
1. Don’t you want your dispute to be decided by someone with the knowledge, experience, and expertise to fully understand it?
In commercial arbitration, the parties’ ability to screen for qualified decision makers enhances the prospects that the dispute will be decided on its merits, not based upon a misunderstanding of a piece of evidence or a subjective evaluation of the appearance or demeanor of a witness. Of course, that expertise comes at a cost. The parties pay the arbitrator’s fees. In court, by contrast, the parties don’t pay for the time spent by the judge or jury. But isn’t the additional cost of compensating a skilled arbitrator worth it, especially considering the attorneys’ fees that can be saved by participating in a process generally accompanied by less discovery and motion practice, and managed by a well-trained and knowledgeable neutral? And commercial arbitration provides the parties with options to limit their expenses for arbitrator compensation by agreeing to select a single arbitrator rather than a three-arbitrator panel, or agreeing that pre-hearing discovery disputes shall be resolved by the panel chair.
2. Is the only way to get a fair shake to have your dispute decided by a judge or a jury?
Most civil lawsuits are litigated in state courts whose judges are elected with significant input from political parties. That doesn’t mean that those judges lack the requisite knowledge, skill, and independence to decide cases correctly, but it also does not ensure that a judge is better equipped to reach a proper result than a well-trained, experienced arbitrator whom the parties have the ability to select based upon his or her industry or subject matter expertise and other credentials.
As arbitration awards generally cannot be overturned for legal error, arbitrators are sometimes unfairly characterized as being above the law. But there is no evidence that arbitrators disregard the law or make legal mistakes with any greater frequency than do judges. Most commercial arbitrators have had distinguished careers as attorneys or judges and fully understand the importance of following the law. They are particularly aware that the contracts they are being asked to interpret generally contain choice-of-law provisions requiring them to apply the laws of a particular state, and that they are obligated to enforce the parties’ selection of the governing law. This begs the rhetorical question: If you have a strong case that requires industry or subject matter expertise to understand all its nuances, including the applicability and interpretation of any applicable law, who do you want to decide it? Again, taking ownership of the dispute resolution process by participating in the selection of the decision maker is simply not possible in court. The value to the parties and their counsel of being able to participate in that selection cannot be overstated.
*We are using the Aardvark moniker to denote our CCA Blog. The Aardvark will provide content from time to time about cases, developments and issues associated with the practice of Arbitration. We hope you will find the blog entries interesting and useful. We encourage you to watch for the Aardvark and its arbitration content that we hope you will enjoy.