ADR

Question 1

What is arbitration?

Answer 1

A private procedure, based on K, for the BINDING resolution of disputes

Two parties may agree to submit any existing or future dispute to arbitration (as a cl in a commercial K)

Characteristics:

(i) Arbitrators are NOT bound by the substantive law OR the rules of evidence (i.e. they do justice as they see fit); AND
(ii) Scope of judicial review is EXTREMELY narrow

Ct serves a “gatekeeping” function, deciding certain “threshold issues”, as to whether the arbitration should PROCEED (if ct decides in favor of arbitration, it retreats from scene)

NOTE: Public policy of NY FAVORS arbitration (and the cts are guided by this principle when deciding whether a particular case should be arbitrated)

Question 2

What are the 5 threshold issues that can be presented to the ct to AVOID arbitration?

Answer 2

1) Did the parties agree to arbitrate? – (i) must be in writing; (ii) agmt must be”clear, explicit & unequivocal”; AND (iii) the right to arbitration NEED NOT be mutual (i.e. only one party has right to invoke)
2) Is the dispute within the scope of the arbitration cl? – arbitrator can decide almost anything, so it depends on the scope of the cl as written
3) Is the arbitration cl valid? –cl is PRESUMPTIVELY valid UNLESS induced by fraud, duress or coercion Doctrine of severability – cts will examine validity of arb clause separately from validity of K AS A WHOLE
4) Is there an express condition precedent to arbitration, AND has been complied w/?
5) Is there a SOL issue?

Question 3

How does a party bring a “threshold issue” to the ct?

Answer 3

1) If already pending action

Proponent should make motion to stay the action & compel arbitration

2) If NO pending action

Proponent served opponent w/ Notice of Intention to Arbitrate

Response: Commence a special proceeding for stay of arbitration

Special proceeding MUST be w/in 20 DAYS of receipt of Notice of Intention or waives any of the threshold objections

Question 4

What are the 3 grounds of judicial review of arbitration awards?

Answer 4

1) “Corruption, fraud, misconduct” in the arbitration proceeding;
2) Bias of an arbitrator who was chosen to be neutral; OR
3) Arbitrator exceeded his powers (almost always loses b/c arbitrators usually have unlimited power unless the parties agree otherwise)

NOTE: In NY, an arbitrator CANNOT award punitive damages

Question 5

What are the 3 other types of alternative dispute resolution (ADR)?

Answer 5

1) Mediation: A NON-BINDING process in which a neutral mediator attempts to facilitate a settlement by speaking confidentially to ea. party and then jointly with both parties present

If there is an agmt, the parties can include a prvn for confidentiality (or they can waive confidentiality)

2) Neutral Evaluation: A NON-BINDING process in which a neutral expert in a subject matter at issue received a condensed ppt abt the merits of each side, evaluates the ppts and PREDICTS ow a ct would decide the dispute
3) Summary Jury Trial (SJT): a CONDENSED version of a real trial in which a REAL JUDGE presides and a REAL JURY is empaneled to hear the case and RENDER a verdict

Rules of evidence are relaxed

After trial, parties may question the jury abt their thought processes

Jury verdict can be binding or non-binding

NOTE: ADR is a creature of K and is ENFORCED in accordance w/ the agmt

NY public policy FAVORS ADR

The ct can recommend, but generally can’t REQUIRE parties submit to ADR

No specific statutory rules governing ADR (where there ARE such rules w/ arbitration; “judical gatekeeping”)