Arbitration & Other Forms of ADR

Question 1

Overview of Arbitration

• what is it
• what are its two major characteristics

Answer 1

• DEF- Arbitration is a private procedure, based on contract, for the BINDING resolution of disputes. Two parties may agree to submit any existing or future dispute to arbitration, e.g., arbitration clauses are common in commercial contracts
• TWO MAJOR CHARS: (1) arbitrators are NOT bound by the substantive law or the rules of evidence; they may do justice as they see fit; (2) the scope of JUDICIAL REVIEW is VERY NARROW

Question 2

Courts as Gatekeepers for Arbitration

Answer 2

When one of the parties to an arbitration agreement resists arbitration in an effort to resolve the case by a conventional judicial proceeding, the courts may be called upon to decide certain “threshold issues” as to whether the arbitration should proceed. If the threshold issues are resolved in favor of the particular arbitration, the court’s involvement ends, and the merits of the dispute are for the arbitrator to decide

Question 3

Public Policy of NY Re: Arbitration

Answer 3

pubPol favors arbitration

Question 4

5 threshold issues that can be presented to the crt in an effort to avoid arbitration

Answer 4

1- Did the parties agree to arbitrate? (need a (i) clear, express, and unequivocal (2) writing, that (3) need not provide a mutual right to arbitrate)

2- Is the dispute w/in the scope of the arbitration clause

3- Is the arbitration clause valid – presumptively valid; invalid only if the clause itself (considered separately from the validity of the overall K via the doctrine of severability) was induced by fraud, duress, OR coercion OR if arb of the particular matter is barred by pubPol (rare)

4- Is there an express condition precedent to arbitration? Has it been complied with?

5- Statute of Limitations

Question 5

How to Bring Threshold Arbitration Issues to the Court:

• in an already pending action
• if no action is pending
• time limit

Answer 5

1- In a pending action the D makes motions to compel arbitration and to stay the civil action

2- If no action is pending, the proponent of arbitration serves the opponent w/ a “notice of intention to arbitrate.” The opponent may then commence a SPECIAL PROCEEDING FOR A STAY OF ARBITRATION and raises any of the 5 threshold issues in that special proceeding

3- Must commence special proceeding for a stay of arbitration no later than 20 days from the receipt of the notice of intention to arbitrate, otherwise you waive the threshold objections

Question 6

Judicial Review of Arb Awards:

What are the 3 grounds for vacating an arbitration award?

Answer 6

1- corruption, fraud, or misconduct in the arbitration proceeding

2- actual bias of an arbitrator who was chosen to be neutral

3- arbitrator exceeded his authority– rare b/c arbitrator usually has broad (nearly unlimited) powers, unless the parties have agreed otherwise

Question 7

Punitive Damages in Arbitration

Answer 7

NY LAW– arbitrator does NOT have the power to award punitive damages

Question 8

Other forms of ADR in NY

Answer 8

• mediation
• neutral evaluation
• summary jury trial

Question 9

General Points a/b Other Forms of ADR

Answer 9

• creatures of K and enforced in accordance w/ the terms of the agreement
• NY PubPOl favors ADR
• court can recommend, but generally cannot require, ADR

Question 10

Two Major Difference btw Other Forms of ADR & Arbitration

Answer 10

1- unlike arbitration, the three additional ADR devices are usually non-binding (unless the parties agree otherwise) b/c their purpose is to help the parties reach a voluntary settlement

2- no specific statutory rules governing the mechanics of enforcing the other ADR agreements

Question 11

Mediation

Answer 11

• Non-binding process in which a neutral mediator attempts to facilitate a settlement by speaking confidentially to each party and then jointly with both parties present
• Mediationagreement may specify (but is not required to do so) that if no settlement is reached, the mediator’s confidential conversations shall notbe disclosedin litigation
• parties choose the mediator

Question 12

Neutral Evaluation

Answer 12

• Non-binding process in which a NEUTRAL EXPERT in the subject matter at issue receives a CONDENSED PRESENTATION about the merits from each side, EVALUATES the presentations and PREDICTS how a court would decide the dispute
• parties choose the neutral expert

Question 13

Summary Jury Trial

Answer 13

• requires an agreement that includes the participation of the court
• SJT is a condensed version of a real trial in which a real judge presides and a real jury is empanelled to hear the case and render a verdict
• typically limited to one day; each side is limited to 2 or 3 hours for its presentations; the technical rules of evidence are relaxed; witnesses may be called and cross- examined; and narrative summaries of potential evidence may be introduced by the attorneys
• After the jury verdict is rendered, the parties may question the jurors about their thought processes
• must agree in advance whether verdict will be binding or non-binding, but almost always non-binding to help reach a voluntary settlement