American Arbitration Association Issues New Rules

The American Arbitration Association (AAA) recently issued Revised Construction Industry Arbitration Rules and Mediation Procedures that went into effect on July 1. There are only a few changes from the prior rules and procedures, but a few of the changes are noteworthy.

For the first time ever, the rules call for all cases with claims of $100,000 or more to go to mediation before arbitration. It is unclear whether mediation under the revised rules is separate from mediation that may be required by the parties’ contract. Unfortunately, the new rule has little teeth – either party may “opt out” of the opportunity to mediate before it proceeds to arbitration.

The AAA has had problems in the past with moving the arbitration process along when a party objects to being joined as a party to the arbitration proceeding. In an attempt to streamline the process, the AAA has changed the time frames and filing requirements for the “joinder” of parties and the “consolidation” of separate arbitration proceedings. For example, one arbitrator may be appointed for the sole purpose of determining joinder and consolidation issues. The arbitrator will come from a special panel of arbitrators specially trained to handle joinder and consolidation issues. Once the joinder or consolidation issue is determined, an arbitrator will then be appointed to determine the underlying disputes between the parties.

A party may now file dispositive “motions” in arbitration. Although arbitrators have long been willing to entertain motions (such motions have always been common in the court system), the AAA rules until now never expressly stated that motions could be filed in arbitration. This may be of significant import to some parties who believe the case “should never see the light of day” and should be dismissed without going through a potentially long and expensive arbitration hearing.

There are a few other changes aimed at making the arbitration process more user friendly. For example, a number of emergency measures are now available for contracts entered onto after July 1. Although an arbitrator generally has no enforcement powers against a person or party that is not a party to the arbitration provision that gave rise to the arbitration, an arbitrator may issue an interim order, such as an injunction, and it is likely the interim order will be enforced by the courts.

The powers of the arbitrator are also enhanced. The arbitrator has been given greater enforcement powers to issue orders to a party that refuses to comply with the AAA rules or the arbitrator’s rulings. The arbitrator has also been given greater control to limit the exchange of documents and information.

There may be nothing earth-shattering about the revised rules, but the AAA is clearly trying to do what is can to make the arbitration process as streamlined as possible.

By: J. Greg Easter