Arbitrating commercial disputes

• Author: Stewart Edelstein
• Pages: 145-160

145

CHAPTER SEVEN

ARBITRATING

COMMERCIAL

DISPUTES

Commercial disputes often arise out of claims of breach of a written

agreement that includes an arbitration clause. By such a clause, the par-

ties agree in advance that if a dispute arises regarding performance of

that agreement, they will arbitrate rather than litigate it. Accordingly,

when taking on a new matt er, determine whether t he parties have agreed

to arbitration, and proceed accordingly.

Not all arbitration clauses are ali ke, and the exact wording is crucial

in determining the scope of and procedures for arbitration. This chap-

ter discusses the advantages and disadvantages of arbitration, how to

review an arbitration clause, the is sue of arbitrability, waiver of the right

to arbitrate, how to select an arbitrator, strategies for the arbitration

process, and post-arbitration award procedu res.

This discussion assumes that the Commercial Arbitration Rules of

the American A rbitration Association (AA A) apply (referred to as R-___),

because most commercial contracts with arbitration clauses so provide.

The rules in effect when filing t he demand for arbitration govern. R-1(a).

Go to adr.org for the most recent version. Note that these rules pro-

vide that, by written agreement, the parties can vary them. R-1(a). The

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AA A has separate rules for disputes involving claims of at least $500,000,

employment claims, construction claims, securities claims, consumer

claims, and patent claims. In reviewing the arbitration clause in connec-

tio n wit h an y di spute , be s ure to ta ke not e of w hich arbi trat ion r ule s appl y.

Be aware that parties can agree in writing to arbitrate a dispute

even after a dispute arises, without any pre-existing arbitration contract

clause. So don’t rule out the possibility of arbitration in that circum-

stance. If you can reach agreement wit h opposing counsel, someti mes it

is possible to change venue to an entirely different legal system.

If you draft an arbitration agreement, ask yourself these questions:

1. Unrestricted submission (arbitrator renders an award on all dis-

putes) or limited submission of disputes to arbitration?

2. Any conditions precedent to arbitration, such as non-binding

negotiat ion or mediation?

3. Panel of one or three arbitrators?

4. Any specific qualifications of the arbitrators required?

5. What rules govern t he arbitration process, A AA rules or

otherwise?

© P.C. Vey/The New Yorker Colle ction/Conde Nas t

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