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Arbitration: Unilateral Steps to Timely Manage Selecting Your “Deciding” Arbitrator?

August 30, 2013

Finding a fair method for opposing parties to timely agree upon the deciding arbitrator, whether it be a one-person panel or the “third”  of a panel of three, is always difficult.  However, it is particularly difficult if your opposition does not wish to reasonably cooperate and the lack of a proscribed process prevents a timely arbitration setting, either intentionally or not.

Here is one unilateral process that should work to force your opposition to select a timely and reasonably neutral “deciding” arbitrator:

First, carefully review your contract or other agreement mandating arbitration of your dispute to be sure you find no method shown on how and within what time-frame opposing parties will select their “deciding” mediator

Second, assuming none, take following unilateral steps:

1)  Prepare (for alternative proposed attachment to a court petition) a proposed Arbitration Management Order, in the following format:  (Note:  Similar to a case management order, first propose your draft to the opposing party for a stipulated order, but if not accepted without unreasonable compromise to procedure and timing, submit your proposal to the Court for ruling, in part or in whole .)

Similar to the case management order, as your Order’s preamble, cite the clear need for timeliness, reasonableness and an orderly structure to accomplish the goal of selection of a neutral arbitrator to permit the arbitration process to be timely accomplished.

Then, state your proposed means of managing that timeliness in obtaining that goal by ordering as follows:

A)  The parties and/or their counsel shall meet, personally, at the offices of (specify) on (specific date) to agree upon and to record those specific characteristics the parties will seek for/in their neutral “Deciding Arbitrator” 

(i.e., Intent: a true neutral;  Questions?:  a lay person or an attorney? a non-marketing court-approved arbitrator? a non-marketing mediator?  a retired or senior judge?;  no past or present significant relationship to any party or party’s counsel, not-actively practicing in the dispute area; not seeking relationships or marketing in the area of dispute; etc.)

B)  The parties shall further agree  upon and record  the venue or venues, (i.e., work or home residence), from which the pool of arbitrator nominees are to be drawn.  In the absence of agreement, the venue of the hearing shall become the mandatory venue for the deciding arbitrator.

(Note: most contracts/agreements call for a specific venue for dispute hearings to permit a hearing by one’s peers; the implication should be that any “decider” should likewise be from that venue).

C)  The parties shall then follow the following selection procedures to either select their own “deciding” arbitrator, or to propose to the Court for such selection.

1)  Each party shall nominate to the other their “party-selected” arbitrator on or before (specific date).

(Note: For any three-arbitrator panel;  If only a one-arbitrator panel, simply omit this step.)

2)  Each party, through their own arbitrator nominee, shall then nominate to the other arbitrator a slate of  three (3) party nominations of the correct characteristics and venue for their proposed “deciding” arbitrator on or before (specific date).

(Note:   It is probably advisable for any nominating party’s counsel to contact each of their final nominees to inquire of any potential conflict of interest, and to ensure their timely availability, cost and willingness to serve, if selected.  This should then be double-checked by the opposing party as part of the following process.)

3)   All parties and/or their counsel shall then meet, personally, to “select” the deciding arbitrator by the following procedure, on (specific date).

A)  Each party shall have two (2) peremptory challenges.  i.e.  no “cause” necessary

B)  In turn, beginning with the Plaintiff, each party first identifies to the other and makes a record of any alleged grounds for cause to strike any one or all of the opposing parties nominations for:

1)  any failure to meet the agreed criteria of the arbitrator-pool characteristics and/or

2)  any other known ground for cause

C)  The nominating party then may then either agree with this stated cause challenge and replace the nomination or challenge the cause and allow the nomination to stand; this process then continues, alternating, until both sides still have three (3) “firm” remaining nominations to being the striking process,

(Note:  Each party should have at least one or two alternative replacements ready to replace a nomination shown to have a problem with cause.  Clear challenges will likely be sustained by the Court!)

(Note:  Alternatively, if both sides agree to an equal number of cause challenges to their respective nominations, leaving an equal number of nominations standing, they may elect not to replace such nominations and merely skip one or more of the following steps as necessary to effectively leave only the final two (s) competing nominations standing.)

4)  With the three “firm” nominations , In turn, beginning with the Plaintiff, each party strikes one of the remaining three nominations by one peremptory strike.

5)  Next, in turn, beginning with the Plaintiff, each party then strikes another one of the opposing party’s two remaining nominations with their second peremptory strike.

6)  Next, each of the two remaining proposals, if not already done, may/should be contacted by one or both parties to inquire about (or confirm) any known conflicts of interest and their availability and willingness to serve.

(Or, as above suggested,  the parties may separately opt to perform this task before nominations to avoid self-elimination of one or both “final candidates”.)

7)  Upon reaching these last two (2) competing remaining nominations, the parties may choose:

a) to agree to one of the two remaining (or even flip a coin?), or,

b) submit the two remaining for election by the court, of one of the two remaining and competing proposals, after argument, including challenges for cause not accepted at the above selection process, with the prevailing party being entitled to the fees and costs of any such court-required determination.

8)  It is to be expressly understood that the Court’s statutory appointment will then be limited to one of the two (2) final and competing proposals, rejecting any nominee who fails for any argued/or discovered cause, and with the Court ultimately comparing and  selecting the one nominee of the final two who most exhibits the likely quality of total neutrality.

There are a host of good arguments as to why the Court should consider and be permitted to enter such an arbitration management  order for the parties to select their “deciding” arbitrator (to allow the arbitration to be accomplished) where none is specifically spelled out in your own agreement.  And, particularly where no time frame is specified in which an arbitration can be accomplished.

Ultimately, it is the specific duty of the Court, in Florida, to appoint such an arbitrator if the “(selection) agreement method fails”.  See, 682.04, Florida Statutes.  However, as Florida’s Arbitration code has no specific procedure or timing as to how the Court is to select its appointment, presumptively it would welcome any fair procedure that accomplished the role, timely.   See,  Chapter 682 Florida Arbitration Code.

This suggested process forces both of the parties to timely initiate the selection process, nominate some qualified persons for the deciding neutral and meet timely to try to agree upon a reasonable selection.  Even if an agreement cannot then be reached, the parties each have one, presumptively qualified nominee and each share the equal risk (and the cost) of whose nomination will be selected by the Court.

This suggested process may also seem cumbersome and perhaps will not be ultimately acceptable to either your opposing party and to the Court.  However, particularly, if time is of the essence (and you already have an outline of your proposed “arbitrator management order” in draft) you might be surprised at your savings in time and money by at least moving something forward, unilaterally.

At the least, this suggested process does not require any agreement of your opposition and the mere threat of such an ordered procedure might greatly speed up your opposition’s lack of alternative effort!

Justice delayed is justice denied.  And both sides deserve timely justice.  This suggested process will allow either side the unilateral ability to timely move any arbitration forward to a conclusion.

(Note:  I (and others) would be interested in hearing your criticisms or any other suggestion for this increasingly frustrating issue of an orderly and timely “selection” of the “deciding” arbitrator.  Please add your input or comments for the good of the Order.)

Dan, from Winter Park, Florida.

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