Page 4 - Alternative Dispute Resolution

S4 | MONDAY, NOVEMBER 16, 2015 | Alternative Dispute Resolution
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At Your (Not So) Final Destination: Appellate Procedures in Arbitration
appealed and the errors alleged, as well as the qualifications, expertise, and number of appellate arbitrators requested. See id. at (a)(iii). Within seven days of the filing of a Notice of Appeal, the Appellee may file a cross-appeal. See id. at (c).
Unless the parties have reached an agree- ment for the method of appointment, the appeal tribunal is selected from AAA’s Appel- late Panel or International Appellate Panel (if the dispute is international in nature) pursu- ant to a list procedure. See id. at A-4, A-5. A panel of three arbitrators will be appointed unless the parties agree to use a single arbi- trator. See id. at A-5(c).
All appeals are resolved upon written submission unless the tribunal deems oral argument necessary or, upon the request of a party, the tribunal at its discretion sched- ules it. See id. at A-15(a). Requests for oral argument, however, much be made within 30 days of service of the Notice of Appeal. See id. at (b).
The Appellant may be assessed the appeal costs, and the reasonable costs of the Appel- lee, if the Appellant is not determined to be the prevailing party by the appeal tribunal. See id. at A-11.
Within 30 days of the service of the last brief, the appeal tribunal is limited to one of the following actions:
1. adopt the Underlying Award as its own, or,
2. substitute its own award for the Under- lying Award (incorporating those aspects of the Underlying Award that are not vacated or modified), or,
3. request additional information and notify the parties of the tribunal’s exercise of an option to extend the time to render a deci- sion, not to exceed 30 days.
See at A-19(a).
JAMS’ Optional Appellate Procedure
JAMS Optional Appellate Appeal Procedure (JAMS Appellate Procedure) dates back to 2003. Like AAA/ICDR, JAMS requires all parties to agree to the JAMS Appellate Procedure for it to be used by the parties.
The Procedure. The Appeal Panel typically consists of three JAMS neutrals with signifi- cant appellate experience and provides for application of “the same standard of review that the first-level appellate court in the juris- diction would apply to an appeal from the trial court decision.”8 See Rule D. The JAMS Appellate Procedure is to be completed in 21 days. See id.
Typically a three-member tribunal is used, unless the parties agree to use one arbitrator. See Rule (A).
The appeal must be served within 14 days from the date the Award becomes final. See Rule (B)(i). A letter or other writing evidenc- ing the appeal must specify the elements of the Award that are being appealed and pro- vide a brief statement of the basis for the Appeal. See id. Within seven days of the ser- vice of the appeal, the opposing party or par- ties may serve a cross-appeal. See id. at (ii). The parties may either elect to rely upon prior briefing or to set up a briefing schedule and submit briefing. See id. at (iv). The panel will conduct oral argument if all parties request it or on its own initiative. See id. at (v). The panel is to issue a decision within 21 days
BY FINLEY T. HARCKHAM AND PETER A. HALPRIN
The finality of arbitration, and lack of judi- cial review or appeal, is often held up as an important reason for the use arbi- tration as a dispute resolution mechanism. Finality refers to the absence in most jurisdic- tions of extensive appellate review of arbitral awards.1 As a general rule, the decisions of arbitrators are final and binding.2 In federal courts in the United States, for example, judi- cial review of arbitration awards is extremely limited3—in marked contrast to federal and state court litigation, where appellate courts may review certain lower court judgments under the de novo standard that allows them to review both factual and legal matters.
The benefit of limited appellate review of arbitration awards is a reduction in litiga- tion costs and delays.4 Indeed, the notion of a dispute without the possibility of a lengthy appellate process is part of the reason that
FINLEY T. HARCKHAM is a senior shareholder of Ander- son Kill P.C. and a member of the firm’s executive com- mittee. PETER A. HALPRIN is an attorney at the firm. Both authors practice in the insurance recovery group.
arbitration is perceived to be more efficient than litigation.
The lack of appeal, however, is not without its detractors. In the 2015 Queen Mary/White & Case International Arbitration Survey, in- house counsel respondents listed the lack of an appeal mechanism as one of the worst characteristics of international arbitration.5 Similarly, a 2011 CPR Institute/Cornell Uni- versity/Pepperdine University survey of For- tune 1000 corporate counsel revealed that 52 percent of those who did not use arbitration said it was because there is rarely an effective way to appeal awards.6
Some arbitral institutions therefore allow the parties to an arbitration agreement to agree to a right of appeal to an arbitration panel and have adopted rules to govern such appellate procedures. Here, we review the rules of AAA/ICDR, JAMS, and CPR.
AAA/ICDR Optional Appellate Arbitration
The AAA/ICDR maintains Optional Appel- late Arbitration Rules (AAA Appellate Rules), which “apply a standard of review greater than that allowed by existing federal and state statutes,” “anticipate an appellate process that can be completed in about three months, while giving both sides adequate time to sub-
mit appellate briefs,” and “permit review of errors of law that are material and prejudicial, and determinations of fact that are clearly erroneous.”7
As arbitration is a creature of contract, the utilization of the AAA Appellate Rules is predicated upon the agreement of the par- ties. Reinforcing this point, the AAA Appellate Rules expressly provide that they are inap- plicable in an agreement between an indi- vidual consumer and a business where the business has a standard application clause and where the terms of such agreement are non-negotiable. In sum, absent agreement, a party may not appeal an arbitration award under the rules.
To appeal an award, a party must assert either a material and prejudicial error of law or a clearly erroneous determination of fact. See id. at A-10. If the appeal tribunal deter- mines that it does not have jurisdiction to hear the appeal, the appeal will be dismissed. See id. at A-9.
The Procedure. Under the AAA Appellate Rules, the process requires the appellant to file a Notice of Appeal within 30 days from the date the Underlying Award is submitted. See id. at A-3. The Notice of Appeal must include, among other things, a statement setting forth the portion(s) of the Underlying Award being
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