While
this week’s reading explains that the choice to incorporate institutional rules
or to develop ad hoc arrangements under which the parties conduct arbitration
without institutional support “depends on the circumstances,” it also notes that
“one factor in deciding whether to use non-administered arbitration is the
availability to the parties of an experienced, efficient arbitrator who can
shepherd the parties through the [arbitration] process.” In this week’s blog entry, I (appropriately) assume
the position of a party that does not have ready access to an experienced,
efficient arbitrator who can shepherd it through the arbitration process—i.e.,
a party that prefers to incorporate institutional rules.
This
week’s reading advises “arbitration counsel should know about choices in the
arbitration marketplace, and make a knowledgeable selection among procedures
and among organizations sponsoring arbitration.” After all, as this week’s reading states,
“the central value of arbitration is . . . the ability of users to make key
process choices to suit their particular needs.” Taking the foregoing excerpts to heart, I
endeavored to gain a better understanding of different arbitral
institutions. I have expressed my
efforts below.
This
week’s reading notes that the “AAA and JAMS are two of the most visible
arbitration ‘provider’ institutions in the United States.” Because of their visibility, I have centered
my blog entry on comparing and contrasting the AAA and JAMS.
First,
it is interesting to note from the outset that the AAA “aims to move cases through
arbitration . . . in a fair and
impartial manner until completion” while JAMS “aims to offer “efficiency, speed,
and results.” Surely both the AAA and
JAMS seeks to accomplish identical goals, however, I find it particular
interesting that the AAA highlights fairness and JAMS highlights time.
Second, in addition to hourly
arbitrator rates, both the AAA and JAMS have some kind of administrative/filing
fee. The AAA, for one, charges on claim value. Between the AAA and
JAMS, the AAA is more cost-effective for claims under $5,000,000. On the other hand, JAMS charges its
administrative fee as a function of the arbitrator’s time and thus may be the
most cost-effective choice for shorter arbitrations.
Third, both the AAA and
JAMS do not allow arbitrators to render an award solely on the basis of default
or the absence of a party. Additionally,
both the AAA and JAMS require an arbitrator to consider substantive evidence
before ruling against an absent party.
Fourth, the AAA
allows parties to adopt its Expedited Procedures (those procedures apply
automatically to disputes under $75,000), but the procedures do not
expressly limit discovery and instead generally adopt shorter timelines for the
arbitration. JAMS has a detailed set of
Expedited Procedures parties can adopt that limit discovery (for example, to
one deposition per party) and preclude dispositive motions. On the other hand, for parties anticipating a
more complex dispute, or needing more flexibility in discovery, both the
general commercial rules of the AAA and JAMS allow the arbitrator, or
arbitrators, to tailor the discovery to the needs of the case.
Fifth, the AAA
and JAMS have similar, and complicated, methods for selecting arbitrators if
the parties cannot agree on their own. The number of available
arbitrators varies, though. According one website’s estimate, there are
over 3,600 arbitrators on the AAA roster and approximately 150-300 arbitrators on
the JAMS roster. Apparently, the AAA is
the best choice for a party seeking an excess of variety and choice.
Sixth, both the
AAA and JAMS provide various, detailed areas of expertise.
Seventh, both the
AAA and JAMS require their arbitrators to adhere to ethical rules.
Eighth, both the
AAA and JAMS explicitly require 30 days’ time in which arbitrators must render
a final award.
Ninth, the AAA does not explicitly provide for summary
disposition, but the JAMS Comprehensive Arbitration rules do (the Comprehensive
rules are for claims over $250,000. JAMS
has a Streamlined set of rules for claims under $250,000). Thus, drafting
parties who want to ensure the possibility of summary disposition are better
off looking to JAMS’ Comprehensive rules.
Of course there are other differences and
similarities between the AAA and JAMS, nonetheless, the foregoing nine
paragraphs encapsulate key differences and similarities and provide valuable
information that better enables users to make key process choices to
suit their particular needs.
Can
you think of any other key differences and similarities between the AAA and
JAMS? What do you find most appealing about the AAA? JAMS?
Sources:
http://www.adr.org/;
http://www.jamsadr.com/;
http://arbitrationnation.com/arbitrationnation-roadmap-when-should-you-choose-jams-aaa-or-cpr-rules/;
and
the
text
It is interesting that you note the different intent between AAA and JAMS being speed and fairness. At this point I have not delved to deeply into the differences between the procedures invoked by either institution, however, I would be curious to know if parties select between the two based on the intentions they represent. I know in the corporate world many transactions and business relationships are maintained because "that's how we have always done it," and I am curious if arbitration falls under the same umbrella of reason. Although lawyers have many liberty to draft arbitration provisions to best suite the client's interests, I imagine that many clients instruct their legal counsel to utilize a certain arbitration institution's guidance because they are familiar with those procedures and would prefer to not drift from what has historically worked for them. This also calls into question whether or not corporations will shift their chosen arbitration institution based on their history of success under that institutions guidance. Under this line of reasoning, corporations would continuously be drifting between institutions based on their success rate until they found the most favorable option. This would likely require extremely intensive research into corporate arbitration history, however, the product would be very telling as to the impact that arbitration success has on corporate selection decisions between arbitration institutions.
ReplyDeleteOne huge difference between AAA and JAMS is the fact that the former is a non-profit organization while the latter is for-profit. This clearly begs the following question: what, if anything, does the JAMS goal of making money do to the services it offers? In other words, does JAMS gouge users of its services or does it provide better services due to its ability to invest in its services through its revenue? You point out that the AAA charges on claim value, which makes it more cost-effective for claims under $5 million. I believe this is right, especially because the vast majority of arbitrations don't involve huge dollar amounts. Although JAMS and its fee as a function of the arbitrator's time may be more cost-effective than AAA for shorter arbitrations, how many arbitrations are indeed shorter? If most arbitrations take close to the same amount of time, then it seems that the JAMS fee format may be gouging users of its services if money could be saved by going with AAA. However, if the JAMS services are superior, then perhaps cost savings would matter less. At the very least, I believe the non-profit vs. for-profit status of the two organizations presents interesting questions and should be highlighted.
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