American Arbitration Rule Changes-What You Need to Know

The American Arbitration Association (www.adr.org)  has made a number of rule changes designed to help keep pace with the changing legal and business climate. The new rules also give greater power to arbitrators to enforce the rules.

Effective November 1, 2013, the AAA has included optional appellate arbitration rules which allows parties to include in their arbitration agreements the newly established AAA Appeal Tribunal.  One of the most frequent complaints of arbitration is the lack of review of arbitration decisions.  Parties can now insert into their arbitration clauses the use of the AAA Appeal Tribunal which can review decisions based on alleged errors of law that are material and prejudicial to a party and determinations of fact that are clearly erroneous.  The appeals will be heard on the basis of appellate briefs and the Appellate Tribunal’s decision then becomes the final award for the purposes of judicial enforcement.  Please note that both parties must agree to the use of the Appellate Tribunal.

Changes to the commercial arbitration rules have also been made for arbitration commenced after October 1, 2013.  Arbitrators now have power to impose sanctions (except a default award which is not available) for failure to comply with AAA rules or an order of the arbitrator. The AAA may also now determine the location of the arbitration if the parties cannot agree and arbitrators now have a larger role in policing discovery procedures.

The new rule changes by the American Arbitration Association are an important step in making arbitration more efficient. The provisions for review are a welcome change considering the incredible burden a party has to obtain review and modification of an arbitration award. The American Arbitration Association’s website has a copy of the various rules available for download at www.adr.org.

The opinions in this blog are solely the author’s and any comments or suggestions are welcome at john@jrjoneslaw.com.

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