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For large, complex arbitration, some parties negotiate for and require three arbitrators to hear their dispute.  The problem with this approach, according to the American Arbitration Association (the “AAA”), is that three-arbitrator panels cost the parties on average 5 times as much as a single arbitrator case.  The AAA suggests there may be a more cost efficient way to deliver the same services, as 60% of business disputes filed with the organization resolve before the actual arbitration hearing.  So why not limit the workload of the three arbitrators prior to the arbitration hearing?

The AAA’s solution to this frequent complaint about arbitration being too costly is found in the new Streamlined Three-Arbitrator Panel Option, which allows all pre-hearing matters to be heard by a single arbitrator, with only the final arbitration being heard by the entire panel.  According to the AAA:

The Streamlined Three-Arbitrator Panel Option allows parties to . . . utilizing a single arbitrator to manage the early stages of the case, decide issues related to the exchange of information and resolve other procedural matters without incurring the costs associated with the entire panel . . . By maximizing the use of a single arbitrator, the parties will be able to capitalize on the cost savings provided by a single arbitrator while still preserving their right to have the case ultimately decided by a panel of three arbitrators.

Parties do not have to agree to the streamlined panel method and may have 3 arbitrators hear and decide every matter.  Further, they may at any time withdraw their consent to participate in the streamlined option and will thereafter have all matters heard by a full panel.  This rule change should be applauded by the ADR community as a money-saving method that still gives the litigants the ability to control their arbitration experience through contract.

About the Author

Jay Young is a Las Vegas, Nevada attorney. His practice focuses on business law, business litigation, and acting as an Arbitrator and Mediator. Peers have named him an AV-Rated Lawyer, Best Lawyers, a Top 100 Super Lawyers in the Mountain States multiple years, and to the Legal Elite and Top Lawyers lists for many years. Mr. Young has been appointed a part time Judge, a Special Master to the Clark County, Nevada Business Court, as an arbitrator by the Nevada Supreme Court. He has been appointed as an arbitrator or mediator of well over 250 legal disputes from business disputes to personal injury matters. He has been named Best Lawyers for Arbitration. Mr. Young is a respected author of ten books, including A Litigator’s Guide to Federal Evidentiary Objections, A Litigator’s Guide to the Federal Rules of Evidence, and the Federal Court Civil Litigation Checklist.
Mr. Young can be reached at 702.667.4868 or at jay@h2law.com.

 

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