In my KEY TO ADR No. 002, I had put forward some ideas as to when it makes sense to voluntarily submit to arbitration and when it does not. In this KEY, I would like to explore the ways that arbitration can be more efficient and cost effective than the court process.
It is a source of constant surprise to me that some lawyers, many senior, dismiss arbitration as a more expensive and time consuming process as litigation. The usual complaint is that because the parties pay for the costs and expenses of the arbitrator and because the hearing process is just as complicated as the court process, arbitration provides no advantages or efficiency over the litigation process.
These lawyers fall into error because they fail to appreciate the extraordinary procedural flexibility that arbitration offers. Perhaps some of these lawyers believe, incorrectly, that the Rules of Civil Procedure must apply to arbitrations or that the procedural code in the Arbitration Act, 1991 has to be followed. Perhaps some lawyers feel that, in any event, it will be impossible to engage opposite counsel in a fruitful discussion designed to tailor the arbitral process to the dispute at hand and hence by default, the Rules of Civil Procedure will apply.
None of this is so. A superficial reading of the Arbitration Act, 1991, reveals that parties have the right to opt out of many of the statute’s provisions, except of course, those designed to guarantee the basics of procedural fairness. This flexibility allows parties and their lawyers the rare opportunity to craft their own procedures to fit the fuss at hand.
To be sure, arbitration, if not properly managed at the outset, does run the risk of replicating the faults and delays which characterize the civil litigation process. Indeed, there is much academic and industry critique of the delay and expense associated with arbitration, particularly international commercial arbitration.
In the end, what parties to a commercial dispute want is fairness, consistency, efficiency in terms of speed and cost, and certainty of enforcement. Arbitration when properly managed delivers these goods.
What follows in this thought piece are some suggestions on how to make the arbitral process more efficient and hopefully more creative than the court process.
Suggestion #1: The Procedural Pre-Hearing
A pre-hearing between counsel and arbitrator is a powerful tool to deal with a wide variety of procedural issues including:
a) Interim matters such as security for costs, injunctions, restraining orders and other matters. Often, and depending on the motion, I dispense with the need for a formal notice of motion, or counsel attendance to have the motion argued. Sometimes affidavit evidence is not required at all.
b) Appeal rights and whether appeals should go to court or to another panel of arbitrators. If there is to be an appeal on fact or mixed fact and law, a transcription of the hearing might be advisable.
c) The issue of subpoenas or notices to attend.
d) The exchange of expert reports and the giving of expert evidence at the hearing.
e) Confidentiality of the evidence and the Award.
f) Bifurcating or case managing issues. For example, it may be that the interpretation of a document or series of documents will determine if and how damages should be assessed. In such cases, it may make sense to conduct a hearing limited to the interpretation issues and postpone the hiring of experts on damages.
Suggestion #2: Good Riddance Pleadings
Even if you have been in practice for a short while, it is hard to imagine framing a dispute other than in the traditional language of fact allegation contained in pleadings. The problem is that vague and wide ranging allegations of fact often give rise to motions for particulars, motions to strike frivolous or “scandalous” assertions, or even motions for judgment. Many of these motions can be eliminated and time and money saved if allegation based pleadings are dispensed with.
I often recommend that the parties replace traditional pleadings with a “Scott Schedule” of issues and evidence. In essence, the Schedule does the following:
a) It sets out the parties positions AND the evidence that the party will rely on to prove that position;
b) The Schedule is a without prejudice document. Admissions can be withdrawn and different positions adopted at any time without order, up to the date of the hearing. The Schedule forces the parties to delineate and communicate their positions and evidence up front and this usually results in the narrowing of the issues for trial and sometimes settlement. Hence, the Schedule is a living document constantly revised as the parties work on it. If there are discoveries, then the Schedule will be updated to reflect the evidence and the positions;
c) The Schedule is usually organized in the way that the parties intend to introduce evidence at the hearing.
Suggestion #3: Show Cause Discoveries
Documentary and oral discoveries absorb time and money. Not uncommonly these discoveries, or at least the broad scope of them, are unnecessary. The problem is particularly acute where e-discovery issues are at stake.
I suggest that the parties work with the arbitrator to limit the time and breadth of discoveries. The onus is on the party seeking the discovery to show cause why it is needed and the scope that is needed.
In this way, disclosure and production can be limited to specific categories of documents, date ranges, key search terms, use of data sampling, and the use of third party experts to conduct document searches under the auspices of the arbitrator.
As noted earlier, where issues can be bifurcated or otherwise case managed, it may also make sense to bifurcate and manage discoveries.
To be sure, there exists a tension between the arbitrator’s duty to be fair and the duty to allow the parties to present their case, as they see fit, as well as the need to manage the discovery process. The Rules of Civil Procedure emphasize proportionality and there is no reason to think that the application of that thinking in arbitration should be any less. The key is early dispute management with the arbitrator to facilitate procedural efficiency.
Suggestion #4: Expert Control and Management
Experts are expensive and their evidence and cross examinations tend to absorb much time at the hearing. Here are some suggestions to streamline this process:
Hot-Tubbing or conferencing is a pre-hearing without prejudice meeting among experts, and sometimes non expert witnesses. The idea here is to have the experts engage in a free form discussion of the issues, methodologies, calculations and conclusions. The lawyers, although present, do not assume a front line role in leading the discussion and should not be permitted to “cross-examine”. They of course can ask questions which are intended to clarify and elucidate. The purpose of the hot-tub is to determine what points, issues or methodologies the experts can agree on and what they can’t agree on.
It may be sensible to have the hot-tub session chaired by a neutral or a mediator. The chair/mediator will ensure that the rules of dialogue and engagement are followed. The chair should remind the experts that they are not advocates for the positions of the parties that hired them, but rather are there as a resource for the arbitration process.
It may also make sense to have the experts exchange draft reports in advance of the session so that each side has some idea of what the experts intend to say.
The protocol for the hot-tub session should be reduced to writing. Most importantly, it should be agreed that none of what is said at the session and none of the draft reports, if exchanged, will form the basis of cross-examination at the hearing.
2. Third Party Expert Selected by the Parties’ Experts
Another technique of expert control and management is to have the experts appoint a third expert who will opine on the issues that divide the experts and parties. Alternatively, where the parties have not engaged their own experts, consider the retainer of one expert by all parties whose opinion will be final, binding and non appealable.
The idea here is that technical evidence and fact finding can be best decided by technical experts and the “legal” issues can be better left to the arbitrator.
Suggestion #5: Time Limits
Many disputes lend themselves well to the Simplified Rules Procedure set out in the Rules of Civil Procedure. Think about whether it makes sense to have the evidence in chief introduced by way of “will say” statement or affidavit. Also consider whether cross-examination of witnesses can be time limited subject to arbitrator discretion.
Suggestion #6: Mediation
The Act does not permit “Med-Arb” by the same decision maker, but the parties can contract out of that provision. If you believe that mediation in the course of arbitration might be of benefit, you should do the following:
a) Make sure that your arbitrator is comfortable with the notion;
b) Draft the appropriate wording in the arbitration agreement to give the arbitrator the jurisdiction to mediate;
c) Discuss with the parties and the arbitrator when might be the best time to mediate.
Suggestion #7: A Fruit Salad of Litigation and Arbitration
I have often heard counsel complain about the wait times and the delay to have interlocutory motions heard. I have long suggested that all interlocutory motions be heard by arbitration. In this way, using some of the suggestions above, arbitration can speed up the court process.
There are many ways to make arbitration work for you and the clients. Clients want to have a fair hearing, want to be heard early, and want cost effectiveness. Due process must be balanced with efficiency. I believe that a well managed arbitration process can accomplish both.
If you have any questions about this article, please do not hesitate to contact Gary Caplan at Mason Caplan Roti LLP.
 See for example Doug Jones, “Techniques in Managing the Process of Arbitration” Arbitration, Vol. 78, No.2 (April 2012) at p. 140. See also (2008) 74 Arbitration Vol. 1 at p.3.
 In international commercial arbitration: context see Jones, supra.
 See the discussion in the context of international commercial arbitration in Doug Jones supra.