INSTITUTIONAL HISTORY
Origins and overview
Founded in 1926, the American Arbitration Association (AAA) is a not-forprofit public service organisation providing dispute resolution services that include mediation and domestic and international arbitration services. For arbitrations, the AAA has established a number of sets of arbitration rules, the most pertinent of which are (i) the Commercial Arbitration Rules (Commercial Rules), including the Supplemental Procedures for Large, Complex Commercial Disputes and (ii) the Optional Rules for Emergency Measures of Protection (Optional Emergency Rules) and the International Arbitration Rules (International Rules), based on the UNCITRAL Rules. In 1996, the AAA established the International Centre for Dispute Resolution (ICDR) as a separate international division to administer international cases.
Geographic seat/contact details
The AAA is headquartered in New York and maintains 34 offices nationwide
in the US. The corporate headquarters of the AAA are at:
335 Madison Avenue, Floor 10
New York, New York 10017–4605
Tel: +1 212 716 5800
Tel: +1 800 778 7879 (Customer Service)
Fax: +1 212 716 5905
Email: websitemail@adr.org
Website: www.adr.org The AAA maintains four Case Management Centres in Fresno, California; Dallas, Texas; Atlanta, Georgia and East Providence, Rhode Island. The AAA also maintains local and regional offices in approximately thirty American cities. Details are available on the AAA’s extensive website at http://www.adr.org.
Established in 1996 as a separate division to administer international cases, the ICDR maintains international centres in New York, San Diego, California and Dublin, Ireland:
International Centre for Dispute Resolution
Thomas Ventrone, Vice President
1633 Broadway, Floor 10
New York, New York 10019–6708
Tel: +1 212 484 4115
Fax: +1 212 246 7274
Email: VentroneT@adr.org
International Centre for Dispute Resolution
Mark Appel, Senior Vice President
14 Merrion Square
Dublin 2, Ireland
Tel: +353 1 676 1500
Fax: +353 1 676 1501
Email: AppelM@adr.org
Further details on the ICDR may be found on its website at www.icdr.org.
Regional scope
The AAA and the ICDR administer arbitrations throughout the world. Domestic arbitrations under the AAA’s Commercial Rules are administered through the AAA, headquartered in New York, and its four case management centres. International arbitrations are generally administered through the ICDR, although the revised International Rules specify that the parties may name either the ICDR or the AAA as the arbitral institution of choice in international contracts. The ICDR administers cases through its centres in New York or Dublin. It also provides services through the facilities of one of the 57 arbitral institutions with which it has agreements of co-operation.
Useful statistics
In the international arena, the ICDR in 2001 reported 649 cases administered involving more than US$10 billion in claims and counterclaims, almost half of which involved claims of more than US$1 million or involved undisclosed amounts. In 2002, the ICDR reported that it administered 672 cases, involving US$3.4 billion in claims and counterclaims, nearly half of which involved claims exceeding US$500,000. It also reports that these claims involved parties from more than 70 countries and that the average time from the initiation of the proceeding to an award was ten months. In 2003, the ICDR administered 614 cases and managed US$3.4 billion in claims and counterclaims. The cases involved arbitrators and parties from 69 nations, and the time from filing to award averaged less than 11 months. In 2004, the ICDR administered 646 cases and managed US$3.5 billion in claims and counterclaims. Cases involved arbitrators and parties from 72 nations, and the time from filing to award averaged less than 11 months. Overall, the AAA administered more than 230,000 cases of all types in 2002, 173,000 in 2003, and 159,000 in 2004, including mediations, arbitrations and other less formal methods of dispute resolution.
AAA/ICDR
ORGANISATIONAL FRAMEWORK
Separate administration of international and domestic cases
The AAA maintains separate divisions and separate sets of rules for international and domestic cases.
The International Rules apply to any case where the parties have agreed in writing to arbitrate disputes under those rules or have provided for arbitration of an international dispute by the ICDR or the AAA without designating particular rules. Under the International Rules, either the ICDR or the AAA may be named by the parties as the arbitral institution of choice for international disputes. Unless otherwise specified, the ICDR will administer international cases. The ICDR will also administer international cases where the parties have selected the Commercial Rules.
Domestic commercial disputes are ordinarily administered under the AAA’s Commercial Rules. Cases involving claims exceeding US$500,000 are subject to the Supplemental Procedures for Large, Complex Commercial Disputes, included with the Commercial Rules.
Functional responsibilities
International Rules
Under the ICDR’s case management system, case management is now organised into three regionally specialised teams – the European Desk, the Americas Desk, and the Asian Desk. A team leader, who is not assigned a specific caseload, oversees each team. That leader is responsible for quality control, conducting all conference calls and participating in preliminary hearings. The ICDR’s standard administrative procedure requires that an administrative conference be conducted in all international cases, bringing the parties together with the international case manager, usually within 14 days of the filing of the case with the ICDR. The case manager remains involved throughout the proceeding. In particular, the case manager co-ordinates the logistics of the arbitration, arbitrator selection, challenges and compensation, as well as delivery of the final award to the parties.
Commercial Rules
Under the AAA’s case management system, all cases are assigned to case managers responsible for the management of the administrative aspects of an arbitration case from commencement to closure. The case manager will endeavour to conduct an initial conference call with the parties within 48 hours of the commencement of the arbitration. As with the International Rules, the case manager remains involved throughout the arbitration.
Neither the AAA nor the ICDR employs terms of reference, nor do they scrutinise the substance of arbitral awards before they are transmitted to the parties.
Arbitral panels
International Rules
The AAA/ICDR maintains an international arbitral panel comprised of approximately 535 persons for international cases. If the parties have not agreed to another method of appointment, the ICDR will use the list method for the appointment of the arbitral tribunal (see below).
Commercial Rules
The AAA maintains a National Roster of Neutrals. Its Commercial Panel numbers in excess of 5,500 and includes specialised panels on energy, employment and construction, among others. If the parties have not appointed an arbitrator and have not provided for another method of appointment, the case manager will submit lists to the parties drawn from the National Roster (see below under ‘Role of the parties and the institution in selection’).
EDUCATION OUTREACH PROGRAMMES
The AAA maintains extensive educational programmes. All members of the AAA’s National Roster of Neutrals are required to participate in a number of arbitrator training courses. In addition, the AAA offers both full and multiple day courses covering topics ranging from arbitration and mediation, advocacy, basic and advanced mediation skills, conflict management and negotiation skills, to collective bargaining and grievance handling.
ADMINISTRATIVE COSTS/ARBITRATOR FEES AND EXPENSES/ LEGAL COSTS
Administrative costs
The administrative costs under the Commercial Rules and International Rules are based upon the same schedule of ad valorem rates. An initial filing fee is payable in full by a filing party when a claim, counterclaim or additional claim is filed. A case service fee will be incurred for all cases that proceed to their first hearing. Both fees are based upon the amount of the claim or counterclaim in accordance with schedules contained in the rules. As of 15 September 2005, the following fee schedule was in effect:
Amount of claim (US$) Initial filing fee (US$) Case service fee (US$)
Above 0 to 10,000 750 200 Above 10,000 to 75,000 950 300 Above 75,000 to 150,000 1,800 750 Above 150,000 to 300,000 2,750 1,250 Above 300,000 to 500,000 4,250 1,750 Above 500,000 to 1 million 6,000 2,500 Above 1 million to 5 million 8,000 3,250 Above 5 million to 10 million 10,000 4,000 Above 10 million * *
Non-monetary Claims** 3,250 1,250
* The initial filing fee in claims above $10 million is a base fee of $12,500 plus 0.01% of the amount of the claim above $10 million. However, the initial filing fee is capped at $65,000. The case service fee in claims above $10 million is $6,000.
** This fee is applicable only when a claim or counterclaim is not for a monetary amount. Where a monetary claim amount is not known, parties may be required to state a range of claims or be subject to the highest possible filing fee. In this situation, the parties are encouraged to contact the AAA to determine the exact filing fee.
AAA/ICDR
Arbitrator fees and expenses
International Rules
Arbitrators are not limited to compensation at a stated rate, but are compensated ‘based upon their amount of service, taking into account their stated rate of compensation and the size and complexity of the case’ (art 32). The case administrator will arrange with the parties and the arbitrators shortly after the commencement of the arbitration an appropriate daily or hourly rate, based upon such considerations. If the parties fail to agree on the terms of compensation, the administrator will set an appropriate rate.
Commercial Rules
Arbitrators are compensated at a rate consistent with the arbitrator’s ‘stated rate of compensation’ (r 51). If there is a disagreement concerning the terms of compensation, the AAA will establish an appropriate rate with the arbitrator and confirm it with the parties.
Parties’ obligations
International Rules
When a party files a claim, the administrator may request the filing party to deposit an advance for the fees and expenses of the arbitrators, the costs of assistance required by the tribunal, including experts, and the fees and expenses of the administrator (art 33). During the course of the arbitral proceedings, the tribunal may request supplementary deposits from the parties.
Commercial Rules
Under the Commercial Rules, the filing fee is paid by any party making a claim or counterclaim, subject to final apportionment by the arbitrator in the award (r 49). The expenses of witnesses for either side are borne by the party producing such witnesses. All other expenses of the arbitration, including required travel and other expenses of the arbitrator, AAA representatives and any witnesses and the cost of any proof produced at the direct request of the arbitrator, are borne equally by the parties, unless they agree otherwise, or unless the arbitrator in the award assesses such expenses or any part thereof against any specified party or parties (r 50). The AAA may require that the parties deposit in advance of any hearing such sums of money as it deems necessary to cover the expenses of the arbitration, including the arbitrator’s fee (r 52).
Default
International Rules
If the deposits requested by the administrator are not paid in full within 30 days after the receipt of a request, the administrator will inform the parties, in order that one of them may make the required payment. If such payments are not made, the tribunal may suspend or terminate the proceedings (art 33).
Commercial Rules
If arbitrator compensation or administrative charges have not been paid in full, the AAA will inform the parties in order that one of them may advance the payment. If such payments are not made, the arbitrator may suspend or terminate the proceedings. If no arbitrator has been appointed, the AAA may suspend the proceedings (r 54).
Under both the Commercial and International Rules, the provision that ‘one’ of the parties may advance the required payment permits a claimant or counterclaimant to prosecute the arbitration proceedings notwithstanding the payment default by the other party.
Awards as to costs
International Rules
The tribunal is required to fix the costs of arbitration in its award. The tribunal has discretion to apportion such costs among the parties if it determines that such apportionment is reasonable, taking into account the circumstances of the case (art 31).
Commercial Rules
The arbitrators are required in the final award to assess fees, expenses and compensation, which include the administrative fees of the AAA, expenses of the arbitration, including required travel and other expenses of the arbitrators, the costs of AAA representatives and any witnesses, the costs of any proof produced at the direct request of the arbitrators, as well as the compensation of the arbitrators. The arbitrators may apportion these fees, expenses and any compensation among the parties as they deem appropriate (r 43). In addition, the arbitrators may award interest as they deem appropriate. The arbitrators may award attorneys’ fees only if such an award has been requested by all parties or is authorised by law or the arbitration agreement (r 43).
AGREEMENTS TO ARBITRATE
Both the International and Commercial Rules contain model arbitration clauses. The parties to a particular transaction should tailor the arbitration clause to fit the particular circumstances of their agreement. In particular, the parties are strongly encouraged to consider a number of issues not addressed by the model clauses. See eg Drafting Dispute Resolution Clauses – A Practical Guide, available on the AAA website, for an excellent discussion of specific arbitration provisions and clauses to supplement the model clauses.
ADMINISTRATION OF AD HOC ARBITRATIONS
The ICDR will administer cases pursuant to the UNCITRAL Rules, the Commercial Arbitration and Mediation Center for the Americas (CAMCA) Rules, or the Inter-American Commercial Arbitration Commission (IACAC) Rules and can also be called upon to act as an appointing authority.
For UNCITRAL cases, the ICDR will act as the appointing authority when requested by the parties or designated by agreement. The AAA can also serve as administrator of the arbitration. These services are governed by the AAA’s Procedures for Cases under the UNCITRAL Arbitration Rules (the UNCITRAL Procedures), which are available on the AAA’s website. The UNCITRAL Procedures contain model clauses for use of the AAA as the UNCITRAL appointing authority and/or administrator.
INITIATING PROCEEDINGS
Required documents/preconditions
International Rules
Arbitration is commenced under the International Rules by filing a Notice of Arbitration (the Notice). The Notice is required to contain a Statement of Claim (art 2). An initial filing fee is payable in full when the Notice is filed.
Commercial Rules
Under the Commercial Arbitration Rules, the terminology is slightly different. The arbitration is initiated through the filing of a Demand for Arbitration (r 4). A Demand for Arbitration form is available on the AAA website. The Demand for Arbitration, which may be filed at any AAA office, must be filed in duplicate with copies of the arbitration provisions of the contract and the appropriate filing fee.
Service requirements
International Rules
The International Rules require the written Notice of Arbitration to be served on the AAA administrator and the respondent simultaneously (art 2). Notices may be served by airmail, air courier, fax, telex, telegram, or other written forms of electronic communication addressed to the party or its representative at its last known address or by personal service, unless otherwise agreed by the parties or ordered by the tribunal. The underlying agreement between the parties should also be consulted to determine if its notice provisions and procedures differ from the AAA’s default notice rule.
Commercial Rules
The Commercial Rules likewise require the Demand for Arbitration to be served on the respondent and filed with the AAA (r 4). Service of documents may be accomplished by mail addressed to the party or its representative, by personal service, overnight delivery or fax. The Commercial Rules also allow the parties and the tribunal to agree that notices may be transmitted by email or other methods of communication (r 39). Once again, the underlying agreement between the parties should be consulted to determine if any specific methods of service are mandated.
Answering documents
International Rules
The respondent is required to submit a written Statement of Defense within 30 days after the arbitration has been commenced that responds to the Notice of Arbitration (art 3). The respondent may also reply to any proposals made by the claimant as to the number of arbitrators, the place of the arbitration, or the language of the arbitration unless those matters have been previously agreed. Additionally, the respondent may make counterclaims or assert setoffs at the time it submits the Statement of Defense. The claimant, in turn, has 30 days to file a Statement of Defense to a counterclaim. As discussed below, challenges to the tribunal’s jurisdiction must be made at the time of the Statement of Defense or will be considered waived (art 15).
Commercial Rules
The Commercial Rules contain slightly different provisions regarding the filing of an answering statement. Specifically, a respondent may file an answering statement within 15 days after the AAA sends confirmation that the demand has been filed (r 4). If no answering statement is filed, the respondent will be deemed to deny the claim. A failure to answer will not delay the arbitration. If the respondent asserts a counterclaim, the counterclaim must contain a statement setting forth its nature, the amount involved and the remedy sought. If a counterclaim is made, the party making the counterclaim must forward the appropriate filing fee with the answering statement to the AAA. As with the International Rules, objections to the tribunal’s jurisdiction or the arbitrability of a claim must be made no later than the filing of the answering statement to the claim or counterclaim in question (r 7).
SELECTION/APPOINTMENT/CHALLENGE OF ARBITRATOR
Make-up of tribunal
International Rules
If the parties have not agreed on the number of arbitrators, one arbitrator is appointed unless the administrator determines in its discretion that three arbitrators are appropriate due to the large size, complexity or other circumstances of the case (art 5).
Commercial Rules
Cases defined as large, complex commercial cases (involving claims over US$500,000) are heard and determined either by one or three arbitrators, as may be agreed by the parties. If the parties are unable to agree upon the number of arbitrators and a claim or counterclaim involves at least US$1 million then three arbitrators determine the case: Procedures for Large, Complex Commercial Disputes L-2 (included with the Commercial Rules).
Requirements of independence
International Rules
All arbitrators are required to be both ‘impartial and independent’ (art 7). Prior to accepting appointment, a prospective arbitrator is required to disclose any circumstance likely to give rise to justifiable doubts as to the arbitrator’s impartiality or independence. If, at any stage during the arbitration, new circumstances arise that may give rise to such doubts, an arbitrator is obliged promptly to disclose such circumstances. The International Rules also impose strict limits on ex parte communications relating to the case with any arbitrator or any candidate for arbitrator, permitting discussions only with respect to the general nature of the controversy and of the anticipated proceedings, a candidate’s qualifications, availability or independence in relation to the parties, and the suitability of candidates for selection as a third arbitrator where the parties or party designated arbitrators are to participate in that selection. The rules also prohibit any ex parte communication by a party or anyone acting on its behalf with any candidate for presiding arbitrator.
Commercial Rules
All arbitrators, including party-appointed arbitrators, are required to be impartial and independent unless the parties have specifically agreed in writing that the party-appointed arbitrators are to be non-neutral and need not meet the standards of impartiality and independence (rr 12 and 17). The Commercial Rules impose a duty of disclosure upon ‘any person’ appointed or to be appointed as an arbitrator, requiring them to disclose any circumstance likely to give rise to justifiable doubt as to the arbitrator’s impartiality or independence, including any bias or any financial or personal interest in the result of the arbitration or any past or present relationship with the parties or their representatives.
Like the International Rules, the revised Commercial Rules now contain strict limitations on ex parte communications with arbitrators or candidates. Permissible discussions with candidates are limited to a description of the general nature of the controversy and of the anticipated proceedings, the candidate’s qualifications, availability or independence in relation to the parties and the suitability of candidates for selection as a third arbitrator where the parties or party-designated arbitrators are to participate in that selection (r 18). The limitations on ex parte communications do not apply to party-appointed arbitrators whom the parties have agreed in writing are to be non-neutral. However, where the parties have agreed in writing that the party-appointed arbitrators shall serve as non-neutrals, the AAA none the less as ‘an administrative practice’ will suggest to the parties that the limitations on ex parte communications with the party-appointed arbitrators apply prospectively.
On 1 March 2004, the 2004 Revision to the Code of Ethics for Arbitrators in Commercial Cases took effect and replaced the 1977 Code. The Revision reversed the presumption of non-neutrality that applied to party-appointed arbitrators under the 1977 Code and imposed instead a presumption of neutrality on all arbitrators, including party-appointed arbitrators, with concomitant obligations of disclosure and limitations upon ex parte communications. The AAA’s amendments to its Commercial Rules that took effect on 1 July 2003 incorporated the main principles of the 2004 Revision to the Code of Ethics regarding the neutrality of party-appointed arbitrators. The 2004 Revision imposed an additional ethical obligation upon party-appointed arbitrators to ascertain and disclose their status as neutral or non-neutral as soon as practicable, but no later than the first meeting of the arbitrators. The 2004 Revision and the 1 July 2003 Amendments to the Commercial Rules brought the domestic arbitration practice in the US substantially into line with prevailing international norms on arbitrator neutrality.
Roles of the parties and the institution in selection
International Rules
The parties may mutually agree upon any procedure for appointing arbitrators and inform the administrator as to such procedure (art 6). If within 45 days after the commencement of the arbitration, the parties have not mutually agreed on a procedure for appointing the arbitrators or have not mutually agreed on the designation of the arbitrators, the administrator will appoint the arbitrators and designate the presiding arbitrator at the written request of any party. In cases where the parties have mutually agreed upon a procedure for appointing the arbitrators, but all appointments have not been made within the time limit specified in that procedure, the administrator will perform the remaining functions at the written request of any party.
In making administrative appointments, the administrator is to endeavour to select suitable arbitrators after consultation with the parties. Although not mentioned in the Rules, the administrative practice of the ICDR is to employ the ‘list method’ of appointment as a default in cases where the parties have not agreed to another method of appointment. The ICDR proposes a list of ten names for sole arbitrator and 15 names for a tripartite panel. In preparing the list, the ICDR first looks to its international panel of arbitrators containing approximately 450 names, half of whom are based in the US. If the parties are looking for a particular subject-matter expertise, the list may be supplemented by panellists from the AAA’s domestic roster (eg construction, employment, patent, energy). The parties may also choose to consider separate lists to achieve a panel that has both international expertise as well as specific subject-matter expertise. See Steven Gallagher ‘International Arbitrator Selection: Party-Appointment and the List Method’ (2002)10 Metropolitan Corporate Counsel 5, May. There is no formal limit to the number of pre-emptory strikes the parties may make from the submitted lists and could conceivably result in the parties striking the entire list. In that event, and if both sides agree, a second list can be provided. However, if the parties do not ultimately arrive at an agreement on the arbitrators from the list(s), the ICDR will appoint the arbitrators from among other members of the appropriate panel.
The International Rules do not prohibit the appointment of nationals of a country of any of the parties. However, when the ICDR/AAA acts as the appointing authority, it may on its own initiative, or at the request of either party, ‘appoint nationals of a country other than that of any of the parties’.
If the notice of arbitration names two or more claimants or two or more respondents, the administrator is required to appoint all of the arbitrators within 45 days after the commencement of the arbitration in the absence of contrary agreement by the parties.
Commercial Rules
If the agreement of the parties names an arbitrator(s) or specifies a method of appointment, that designation or method will be followed (r 12). Upon the request of any appointing party, the AAA will submit a list of members of its National Roster from which the party may, if it so desires, make the appointment. Where the parties have agreed that each party is to name one arbitrator, and any party fails to make the appointment within the time specified in the agreement, the AAA makes the appointment. If the agreement fails to specify a time for making the party appointment, the AAA will notify the party to make the appointment. The AAA will make the appointment in the event that the party has not done so within 15 days of the issuance of the Notice.
If the parties have not appointed an arbitrator and have not provided any other method of appointment, the AAA will send simultaneously to each party an identical list of ten names of persons chosen from the National Roster, unless the AAA decides that a different number is appropriate (r 11). If the parties are unable to agree upon an arbitrator from the list, each party to the dispute has 15 days from the transmittal date in which to strike names objected to, number the remaining names in order of preference and return the list to the AAA. From among the persons who have been approved on both lists, and in accordance with the designated order of mutual preference, the AAA invites the acceptance of an arbitrator to serve. If the parties fail to agree on any of the persons named, of if the accepted arbitrators are unable to act, or for any other reason the appointment cannot be made from the submitted list, the AAA has the authority to make the appointment from among other members of the National Roster without the submission of additional lists. As a matter of practice, however, the AAA will provide additional lists if requested by all parties. For cases involving claims of more than US$500,000, the AAA will appoint arbitrators from the Large, Complex Commercial Case Panel in the same manner as provided in the regular Commercial Rules.
Where the parties are nationals of different countries, the AAA may appoint as an arbitrator a national of a country other than that of any of the parties at the request of any party or on its own initiative. Such a request must be made before the time set for the appointment of the arbitrator as agreed by the parties or as set by the Commercial Rules (r 14). In cases involving two or more claimants or two or more respondents, the AAA has authority to appoint all of the arbitrators in the absence of contrary agreement of the parties (r 11).
If parties have authorised the first two arbitrators to appoint a chairperson within a specified time and no appointment has been made within the time specified or any agreed extension, the AAA has authority to appoint the chairperson (r 13). If no time is specified for appointment of the chairperson and the party-appointed arbitrators or the parties do not make the appointment within 15 days from the date of the appointment of the last party-appointed arbitrator, the AAA has authority to appoint the chairperson. If the parties have agreed that their party-appointed arbitrators will appoint the chairperson from the National Roster, the AAA will furnish to the party-appointed arbitrators a list selected from the National Roster. The chairperson is selected from the list based on the method of strikes and rank order of preference applicable to the selection of other arbitrators from the National Roster.
Timing/handling of challenges
International Rules
The International Rules empower a party to challenge any arbitrator whenever circumstances exist that give rise to ‘justifiable doubts as to the arbitrator’s impartiality or independence’ (art 8). A party wishing to challenge an arbitrator must send a notice of the challenge to the administrator within 15 days after being notified of the appointment of the arbitrator, or within 15 days after the circumstances giving rise to the challenge become known to that party. The party is required to state in writing the reasons for the challenge. When an arbitrator has been challenged by one party, the other party or parties may agree to accept the challenge, and if there is agreement, the arbitrator is required to withdraw. The challenged arbitrator may also withdraw in the absence of such an agreement. If the other party or parties do not agree to the challenge or if the challenged arbitrator does not withdraw voluntarily, the administrator will decide on the challenge (art 9).
Commercial Rules
Under the Commercial Rules, as amended 1 July, 2003, any arbitrator shall be subject to disqualification for partiality or lack of independence, inability or refusal to perform his or her duties with diligence and in good faith, and any grounds for disqualification provided by applicable law (r 17). However, in the event that the parties have agreed in writing that party-appointed arbitrators shall be non-neutral, party-appointed arbitrators are not subject to disqualification for partiality or lack of independence. Upon objection of a party to the continued service of an arbitrator, or on its own initiative, the AAA determines conclusively whether the arbitrator should be disqualified.
RESOLUTION OF JURISDICTIONAL ISSUES
The International and Commercial Rules contain virtually identical provisions regarding the tribunal’s jurisdiction. The tribunal has power to rule on its own jurisdiction and decide objections to the existence, scope or validity of the arbitration agreement (art 15 and r 7). Additionally, the tribunal has power to determine the existence or validity of the contract in which an arbitration clause is included. In keeping with the concept of separability, a decision by the tribunal that the contract is null and void does not automatically render the arbitration clause itself invalid.
Both sets of rules require parties to object to the jurisdiction of the tribunal or to the arbitrability of any claims or counterclaims no later than the filing of the Statement of Defense to the claim or counterclaim at issue. The tribunal may rule on objections to jurisdiction or arbitrability either as a preliminary matter or in the final award.
Unlike the International Chamber of Commerce (ICC) Rules (art 6), the AAA International and Commercial Rules do not contain provisions allowing the AAA or ICDR to serve as a jurisdictional gatekeeper by reviewing challenges to the existence, validity or scope of the arbitration agreement after the arbitration has been filed, but before the tribunal is appointed.
AAA/ICDR
TYPICAL AND/OR REQUIRED PROCEDURES
Pleadings
International Rules
Pleadings expressly contemplated by the International Rules are Statements of Claims and Counterclaims. The tribunal has discretion to require the parties to present additional written statements and to fix time periods for such statements (art 17). The Rules also allow parties to amend or supplement their claims, counterclaims or defences unless the tribunal considers it inappropriate to allow an amendment because of the party’s delay in making it (art 4).
Commercial Rules
The Commercial Rules expressly allow the parties to file a demand for arbitration, answering statements and counterclaims. The parties are allowed to make new or different claims under the Commercial Rules with the caveat that, after the appointment of the arbitrators, the arbitrators must consent to any such changes (r 6).
Default
Both sets of rules expressly deal with default situations. In an international proceeding, if a party fails to participate in the appointment of arbitrators, the administrator shall perform that task (art 6). Moreover, if a party fails to file a Statement of Defense in time, fails to appear at a hearing after being duly notified of the hearing, or fails to produce evidence or take other steps in the proceeding without sufficient cause for the failures, the tribunal may proceed with the arbitration and make an award based on the evidence before it (art 23). The Commercial Rules likewise allow the arbitration to proceed in the absence of a party or representative who fails to be present after receiving notice or fails to obtain a postponement (r 29). However, the award may not rest solely on a party’s default and the party who is present must submit evidence to support an award.
Documents and discovery
International Rules
A tribunal may order the parties to produce documents, exhibits or other evidence it deems necessary or appropriate (art 19). The tribunal may also order a party to produce a summary of the documents and other evidence that party intends to present. The tribunal also has broad authority to conduct the arbitration ‘in whatever manner it considers appropriate’ so long as each party is are treated equally, has a right to be heard, and is given a fair opportunity to present its case (art 16). The Rules make no express reference to depositions, which are generally not favoured in international practice. Finally, in accordance with international practice, witness statements are typically exchanged between the parties before the hearing (art 20).
Commercial Rules
The Commercial Rules grant the arbitrators discretion to direct the production of documents and other information and the identification of witnesses (r 21). The parties must exchange copies of exhibits they intend to submit at the hearing at least five business days before the hearing. Additionally, the arbitrator may order an inspection or investigation in connection with the arbitration (r 33).
The Procedures for Large, Complex Commercial Disputes (the Procedures) applicable in Commercial Rule arbitrations where any claim exceeds US$500,000 require the tribunal to hold a preliminary hearing to consider, inter alia, the extent to which discovery will be conducted, whether sworn statements and depositions may be introduced, and the exchange of documents. The Procedures give the arbitrators broad authority to take steps to avoid delay and to balance the goals of achieving a fast, speedy and cost-effective resolution of the case. In particular, the arbitrators may limit discovery but are also allowed to order: (i) production of documents and other information; and (ii) upon good cause shown, depositions and interrogatories. The tribunal has authority to resolve any discovery disputes.
Evidence
International Rules
The tribunal has the power to determine the admissibility, relevance, materiality and weight of the evidence offered by the parties (art 20). Evidence may be presented in international proceedings either at the oral hearing or in the form of signed witness statements. The tribunal may also appoint independent experts to report to it on specific issues (art 22). Upon request of a party, the tribunal will allow the parties to question tribunal-appointed experts at the hearing. Ultimately, each party bears the burden of proving the facts relied on to support its claims or defences (art 19).
Commercial Rules
The arbitrator is vested with authority to determine the admissibility, relevance, and materiality of any evidence offered and has the power to exclude evidence he or she deems to be cumulative or irrelevant (r 31).
Time limits and calculation
Agreements to arbitrate often contain express time limitations on arbitral proceedings. With respect to deadlines in the arbitration itself, the parties’ agreement will generally govern. The International and Commercial Rules provide default deadlines for administrative hearings, answering statements, counterclaims, the preliminary hearing and the appointment of arbitrators. Additional deadlines, including any pre and post-hearing briefing deadlines and the hearing date, may be set out in a Scheduling and Procedure Order issued by the tribunal.
Unless the parties agree otherwise, the Commercial Rules require the arbitrators to make the award within 30 days after the closing of the hearing (r 41). The International Rules are silent on the time by which the award must issue.
Interim relief
Both sets of Rules allow the tribunal, once constituted, to order interim measures, including injunctive relief and measures for the protection or conservation of property (art 21 and r 34). The Rules also agree that requests for interim measures addressed to judicial authorities do not waive the right to arbitrate.
The Commercial Rules also include Optional Rules for Emergency Measures of Protection (Optional Emergency Rules) that may be adopted by the parties by special agreement or in their arbitration clause. The Optional Emergency Rules allow parties who may need emergency relief before the arbitral panel is constituted to seek such relief from an emergency arbitrator appointed by the AAA. In contrast, the International Rules have no provisions for emergency arbitrators before the tribunal is constituted.
HEARINGS
Need for oral hearing
The International Rules contemplate the existence of oral hearings, and there is no express provision that allows the party to waive the oral hearing (art 20). On the other hand, the Commercial Rules expressly allow the parties to agree to waive oral hearings (r 30).
Rights of audience
While the International Rules allow parties to be represented in the arbitration, they do not impose any requirements or qualifications on the representatives (art 12). Similarly, the Commercial Rules allow parties to be represented ‘by counsel or other authorised representatives’ (r 24). Once again, the rules do not offer any further guidance. Accordingly, it is recommended that the parties consult governing law to determine if there are any limitations or qualifications for those seeking to represent parties in arbitration. See The Florida Bar v Rapoport 845 So 2d 874 (Fla, 2003) (affirming an injunction preventing a lawyer who lived in Florida but who was not member of the Florida bar from representing clients in securities arbitrations in Florida).
Timing/duration
The tribunal has authority to set the date, time and place for the hearings. While the International Rules require at least 30 day’s advance notice of the initial oral hearing, the Commercial Rules require at least ten day’s advance notice (art 20 and r 22).
Reopening of hearing
Upon the conclusion of the oral hearings, the tribunal will ask the parties if they have any further testimony, evidentiary submissions or witnesses to be heard. If the parties respond in the negative, or if the tribunal is satisfied that the record is complete, the tribunal may declare the hearings closed (art 24 and r 35). In its discretion, the tribunal may reopen the hearings at any time before the award is made (art 24 and r 36). Under the Commercial Rules, if briefs are to be filed, the hearing shall be declared closed as of the final date set by the arbitrators for receipt of the briefs (r 35). In the absence of other agreements, the time limit within which the arbitrators are required to make the award commences upon the closing of the hearing. The award is required to be made within 30 days from the date the hearing is closed, unless otherwise agreed by the parties or specified by law (r 41).
AWARDS
Prior approval/scrutiny
In contrast to art 27 of the ICC Rules of Arbitration, the International and Commercial Rules do not require arbitrators to submit their draft awards to the AAA/ICDR for substantive review or approval.
Essential requirements
International Rules
Awards rendered must be in writing and contain reasons upon which they are based, unless the parties have agreed otherwise (art 27). The award shall also be dated and indicate that it was made at the place of arbitration. The tribunal must fix the costs of arbitration in the award, which may include the fees and expenses of arbitrators, administrative costs, and reasonable attorneys’ fees (art 31).
Commercial Rules
The Commercial Rules contain similar provisions with one major difference: the presumption regarding a reasoned award is reversed. Under the Commercial Rules, the arbitrator need not render a reasoned award ‘unless the parties request such an award in writing prior to appointment of the arbitrator or unless the arbitrator determines that a reasoned award is appropriate’ (r 42).
Dissenting opinion
Both the International and Commercial Rules require a majority of the arbitrators to sign the award. Neither set of Rules expressly addresses dissenting opinions. However, if an arbitrator has failed to sign the award, the International Rules require a written explanation for the absence of his or her signature (art 26).
Correction of errors
The International Rules allow a party to request the tribunal to interpret the award or correct any clerical, typographical or computation errors or make an additional award as to claims not decided in the award within 30 days after the award is received (art 30). The Commercial Rules are slightly different. A party may request the arbitrator to correct any clerical, typographical, or computation errors in the final award within 20 days after transmittal of the award (r 46). The arbitrators may not re-determine the merits of any claim already decided in the award.
Review and appeals
Article 27 of the International Rules provides that awards shall be final and binding on the parties. Additionally, the parties undertake to carry out the award without delay. The Commercial Rules address the issue of the finality of awards indirectly, by providing that parties to an arbitration under the Commercial Rules are deemed to have consented that judgment upon the award may be entered in any federal or state court having jurisdiction (r 48).
Publication of awards
The 1 July 2003 amendments to the International Rules added an important new provision regarding the publication of awards. The AAA/ICDR is now authorised to publish or make publicly available awards that have been edited to conceal the names of the parties and other identifying details or that have been made publicly available during enforcement proceedings, unless the parties have agreed otherwise (art 27).
INSTITUTIONAL PROS AND CONS
Emergence of the ICDR
The AAA is the pre-eminent domestic arbitration institution in the US. The development of a separate set of international arbitration rules (based on the UNCITRAL rules), the establishment of the ICDR as a separate division for the administration of international cases, and the establishment of another international arbitration centre in Dublin have strengthened the ICDR’s worldwide capacity and have established it as one of the world’s leading international arbitral institutions.
Streamlined bureaucracy
Under both the Commercial Rules and International Rules, the administrator engages in proactive case management, involving administrative conference calls at the outset of the proceeding, as well as preliminary hearings or conferences as appropriate to facilitate prompt resolution. That the AAA and the ICDR do not independently review the tribunal’s jurisdiction before it is appointed and do not scrutinise the substance of awards before issuance appear to expedite the process, as demonstrated by the ICDR’s report that its average international case requires only ten months from commencement of the arbitration to the issuance of the final award. The potential disadvantage is that the arbitral tribunal, free from administrative scrutiny, may issue awards that are procedurally or substantively flawed. On the other hand, the maintenance of quality rosters and panels of arbitrators, combined with mandatory continuing arbitrator training, helps to assure that the arbitral tribunals are qualified to render reliable awards.
Optional emergency rules
The Optional Emergency Rules that the AAA offers under the Commercial Rules provide a forum for emergency interim relief by an emergency arbitral panel before the formation of the actual tribunal to hear the merits of the case. The inclusion of similar provisions in the International Rules would probably be salutary. Compare ICC Rules for a Pre-Arbitral Referee.
Fees and expenses
The calculation of administrative fees based upon the amount of the claims presented is a potential disadvantage in large cases. Likewise, the provision in the International Rules that the arbitrator’s fees may take into account the complexity and amount in controversy could potentially generate substantial expenses in large cases. However, the size and complexity of the case are simply among the factors to be taken into account, along with the arbitrator’s stated rate of compensation, and under the International Rules the administrator consults with the parties and seeks their agreement on the terms of arbitrator compensation.
Publication of redacted awards
The amendment to the International Rules to allow the publication of redacted awards should contribute to the development and understanding of international commercial arbitration principles and procedures. However, the amendment has also generated controversy. Some critics argue that the rule unfairly thwarts the expectation of confidentiality and should be applied only where the parties have expressly agreed to publication, whereas the rule allows publication unless the parties have specified otherwise.
Independence of arbitrators
Finally, the AAA’s amendment to the Commercial Rules to require that all arbitrators be independent and impartial (unless the parties agree otherwise in writing) and its approval of the 2004 Revision to the Code of Ethics for Arbitrators in Commercial Cases are important measures that substantially harmonise US commercial arbitration practice before the AAA with prevailing international norms.
