AAA’s Amended Commercial Arbitration Rules Now Effective

The American Arbitration Association (AAA) revised the Commercial Arbitration Rules and Mediation Procedures to assist parties in obtaining an orderly, economical, and expeditious procedure. With a focus on process improvements, the updated rules, effective September 1, 2022, include revisions in a number of key areas, including consolidation and joinder, use of technology, enhanced speed and economy, and greater security and privacy. In addition, a number of updates reinforce the arbitrator’s authority to control discovery and motion practice.

Changes to the Expedited Procedures

Revised Rule R-1 (a) increases the upper limit for the application of the Expedited Procedures from $75,000 to $100,000. Rule R-39 excludes cases administered pursuant to the Expedited Procedures from seeking emergency measures of protection under Rule R-39 (former Rule R-38). Expedited Procedure E-5 includes a prohibition on discovery, beyond the exhibit exchange provided for in E-5(a), and on motions absent good cause as determined by the arbitrator. If the arbitrator allows discovery for good cause, E-8(b) allows AAA in consultation with the arbitrator to remove the case from the Expedited Procedures and the limitation on compensation in accordance with E-10(b). E-7 provides that an evidentiary hearing occur within 60 days after the preliminary hearing, or as otherwise mutually agreed to between the parties and the arbitrator. The arbitrator may determine the method of hearing. These changes reinforce AAA’s commitment to speed and economy in the arbitration process, especially in cases with smaller claim amounts.

Changes to Large Complex Case Procedures

Revised Rule R-1(b) raises the threshold for application of these procedures from cases where any claim is at $500,000 to at least $1,000,000. In addition, L-2 raises the threshold claim amount for a panel of three arbitrators from $1,000,000 to at least $3,000,000.

Changes to Regular Track Rules

AAA administers cases in accordance with the Regular Track Rules unless amended by the arbitration provision, agreement of the parties, the Expedited Procedures or the Large Complex Case Procedures.

• Standards of Conduct for Parties and Representatives—New Rule R-2(c) requires that parties and their representatives conduct themselves in accordance with the AAA-ICDR Standards of Conduct for Parties and Representatives. Failure to do so may result in AAA declining to administer a case or a caseload.
• AAA’s Administrative Review Council—Rule R-2(d) now expressly identifies the council as the authority for making decisions regarding certain administrative issues for cases administered pursuant to the Large Complex Case Procedures and for other cases when AAA, based on its sole discretion, deems it appropriate. The council’s authority is limited to determining challenges to (1) the appointment or continuing service of an arbitrator, (2) the locale of proceedings, and (3) whether the initiating party met the filing requirements contained in the Commercial Arbitration Rules.
• Filing Requirements—Rule R-4 more clearly differentiates between filing requirements and the filing process. New Rule R-4(b)(vi) specifically grants AAA the authority to determine if filing requirements were met.
• Consolidation and Joinder—One of the key changes is new Rule R-8. R-8(a) allows a party to a request for consolidation of two or more existing arbitrations into a single proceeding. AAA has the discretion to direct that the consolidation request be decided by the arbitrator appointed in the first-filed case or AAA may appoint a consolidation arbitrator for the sole purpose of deciding the consolidation request. In deciding whether to consolidate, the arbitrator or consolidation arbitrator shall take into account all relevant circumstances. R-8(a)(vi)(a) through (e) provide guidance as to factors that should be considered.
  
  R-8(b) grants a merits arbitrator the authority to make a decision on joinder. If AAA has not appointed a merits arbitrator, AAA may appoint an arbitrator for the sole purpose of deciding the joinder request. The lack of response by a party to be joined will not be considered an automatic denial of the joinder request. The arbitrator may review the underlying documents to determine if that party has already agreed to joinder.
  
  R-8(c) provides that if an arbitrator determines that consolidation of separation cases or that the joinder of additional parties is permissible, that arbitrator may also make decisions regarding any previously appointed arbitrators or selection of arbitrators to fill any vacancies.
• Fixing of Locale—Rule R-12 (former Rule R-11) clarifies that the locale provision in an arbitration clause governs unless the parties agree to, or the arbitrator determines applicable law requires, a different location. New Rule R-12(c) addresses arbitration agreements that provide for multiple locales.
• Limitation on the Number of Strikes—Rule R-13 (former Rule R-12) permits the AAA, at its discretion, to limit the number of strikes on a list of arbitrators provided to the parties. This change will help avoid situations where AAA cannot appoint an arbitrator because the parties struck all of the candidate arbitrators included on the initial arbitrator list and AAA needs to send a supplemental list.
• Appointment of Chairperson by Party-Appointed Arbitrators or Parties—Rule R-15 (former Rule R-14) specifies in R-15(a) that if the arbitration agreement does not specify the selection process, the AAA, at their sole discretion, shall determine selection of a chairperson. New rule R-15(c) requires that the chairperson be from the AAA’s roster unless the parties agree otherwise.
• Number of Arbitrators—Rule R-17 (former rule R-16) updated to address arbitration clauses that do not specify the number of arbitrators in numerical terms.
• Dispositive Motions—Rule R-34 (former rule R-33) now requires the arbitrator consider the time and cost associated with the parties’ preparing and submitting a dispositive motion when deciding whether to allow the filing of the motion. The arbitrator may also assess fees, expenses, and compensation incurred in connection with a dispositive motion as part of their decision on the motion.
• Emergency Measures of Protection—Rule R-39 (former rule R-38) now allows the emergency arbitrator to consider when making a decision on cost allocation whether the party requesting emergency relief did so in good faith.
• Closing of Hearing—Rule R-40 (former rrule R-39) allows arbitrators time to determine if they need additional submissions by extending the deadline to close the hearing to no more than seven days after the receipt of post-hearing submissions.
• Confidentiality—New rule R-45 codifies existing obligations of AAA staff and arbitrators to keep confidential all matters relating to an arbitration or an award. In addition, the new rule explicitly authorizes the arbitrator to issue any confidentiality orders necessary for the case, thus expanding the arbitrator’s enforcement powers under rule R-24 (former rule R-23).
• Modification of Award—Rule R-52 (former rule R-50) allows an arbitrator upon a party’s request to modify clerical, typographical, or computational errors, as well as interpret their award.
• Neutral Arbitrator’s Compensation—Rule R-57(a) (former rule R-55) was updated to reference the Notice of Compensation Arrangements that the notice be consistent with the compensation arrangements indicated on the AAA resume presented to the parties for consideration pursuant to Rule R-13 Appointment from the National Roster.
• Remedies for Non-Payment—Rule R-59(a) (former rule R-57(a)) clarifies the optional measures a party may request the arbitrator to order to address a party’s non-payment of administrative fees, arbitrator compensation, or expense deposits.

Changes to Regular Track Rules Regarding the Use of Technology

Revisions of rules R-22 (former rule R-21), R-25 (former rule R-24), and R-33 specifically provide that the arbitrator may order the use of technology to facilitate attendance at the preliminary hearing and the hearing, when appropriate. Rule R-33(c) (former rule R-32) specifically authorizes the arbitrator to allow the parties to present some or all testimony or evidence through a means other than in-person presentation, including video, audio, or other electronic means. Rule R-29 (former rule R-28) no longer limits the official record a proceeding to a transcription created by a traditional stenographer. Rule R-44 (former rule R-43) now allows for alternative methods of notice and communication, including via platforms. Rule R-48 (former rule R-46) now permits electronic signature of an award by the arbitrator, unless applicable law requires otherwise.

New Preliminary Hearing Procedures

New Procedure P-2(vi) recommends a discussion by the arbitrator with the parties regarding cybersecurity, privacy and data protection be conducted during every preliminary hearing. New procedure P-2(xii) adds language regarding the existence and identify of sources of third-party funding as a potential topic for discussion during the preliminary hearing. AAA made this change to ensure an arbitrator’s disclosure statement is as complete as possible.