WHAT CAN BE DONE TO REDUCE AN ARBITRATION COSTS AND TIME?

Introduction: Managing Arbitration Costs Effectively

“Reduce arbitration costs and time as much as possible”, Claimants’ common desire is. One of the most common concerns clients express when facing arbitration is the potential for escalating costs and prolonged proceedings. While arbitration can offer a more flexible and confidential alternative to litigation, it’s essential to approach the process with strategies that keep both time and expenses in check.

Without proper planning and oversight, arbitration may result in significant financial strain, turning what was meant to be a cost-effective solution into a complex and expensive endeavor. However, with the right tools and tactics, arbitration can still be managed efficiently, delivering swift and fair outcomes at a fraction of the cost of traditional litigation.

This guide outlines practical, proven strategies to help you streamline your arbitration process—keeping it both timely and cost-effective. From narrowing the scope of disputes to selecting the right arbitrator, we will explore how a well-structured approach can not only reduce costs but also ensure a resolution that meets your business objectives.

By taking proactive measures at every stage of the arbitration, you can maintain control over the process and avoid unnecessary expenses, all while achieving a just and equitable resolution.

A summary of some of these potential measures follow.

Preliminary Planning and Agreement to Reduce Arbitration Costs and Time

Agree on Key Issues to help reduce Arbitration Costs and Time

Before entering into arbitration, both parties should try to agree on what exactly is being disputed. A clear identification of issues helps in focusing the arbitration only on what truly matters. This eliminates the need for lengthy hearings on tangential or unrelated matters.

Clear Arbitration Agreement:

The arbitration agreement should be carefully drafted with clear provisions about the scope of the arbitration, choice of rules, and any specific procedural requirements. This can include the maximum number of hearings, page limits on written submissions, and timeframes for each stage of the process.

Fast-Track or Expedited Procedures:

Many arbitration institutions (like the ICC, LCIA, or DIAC) offer expedited rules, where cases are resolved more quickly. For example, hearings may be limited to one or two days, and there could be restrictions on the length of written submissions. The goal here is to agree on these fast-track rules at the outset to avoid a protracted process.

Efficient Selection of Arbitrator(s)

Single Arbitrator:

In many cases, using a single arbitrator rather than a panel of three can reduce costs significantly. This avoids scheduling delays, reduces fees (as you’re only paying one arbitrator instead of three), and can help in reaching a quicker decision.

Experienced Arbitrator:

Choosing an arbitrator with experience in the subject matter can avoid delays caused by the arbitrator needing time to familiarize themselves with technical or industry-specific issues. An experienced arbitrator can also better anticipate procedural inefficiencies and work to avoid them.

Effective Communication and Case Management to Reduce Arbitration Costs and Time

Streamlined Communication:

With modern technology, there’s little need for lengthy in-person meetings unless absolutely necessary. Virtual hearings can reduce travel and logistical costs and speed up the process. Communicating regularly and clearly about deadlines and procedural matters also ensures that the arbitration doesn’t face unnecessary delays.

Timetables and Deadlines:

A strict, well-thought-out procedural timetable can prevent the arbitration from dragging on indefinitely. Both parties and the arbitrator should agree to clear deadlines for submission of documents, exchange of witness statements, and hearings. The arbitrator should enforce these deadlines and discourage unnecessary adjournments.

Pre-Hearing Conferences:

These conferences help to resolve procedural issues and plan the arbitration efficiently. For example, agreeing on the sequence of witnesses, or setting the scope for document production, can ensure that time is not wasted during hearings themselves.

Evidence and Witness Management

Limit Evidence:

One of the biggest contributors to delays and costs in arbitration is the overproduction of documents or presenting excessive evidence. By agreeing in advance to limit the volume of evidence to what is strictly necessary for resolving the dispute, parties can avoid wasting time on reviewing and disputing unnecessary evidence.

Written Witness Statements:

Using written witness statements instead of requiring every witness to provide oral testimony can save a significant amount of time. Cross-examination can then be limited to key witnesses, rather than having a long lineup of people providing testimony.

Joint Expert Reports:

In cases where expert testimony is needed, parties may agree to appoint a joint expert or have their experts work together on a joint report. This eliminates the need for conflicting expert evidence, which can prolong the proceedings, and reduces costs by having only one expert to compensate.

Document Control

Limit Discovery to Reduce Arbitration Costs and Time:

Arbitration is often more flexible than litigation when it comes to discovery. Parties can agree to limit the discovery process, perhaps only exchanging documents that are directly relevant to the issues at hand. This avoids the time and cost of extensive document production, which can drag on for months. This is a feature taken from the common law system and hence seen in arbitration with an important common law factor.

Electronic Submission:

Utilizing electronic systems for submitting documents and evidence can drastically reduce both time and cost. This eliminates the delays that come with physical filing and transportation of materials. Many arbitration institutions provide secure platforms for electronic document management.

Settlement Encouragement to Reduce Arbitration Costs and Time

Mediation or Negotiation:

Settlement discussions or mediation can be incorporated into the arbitration process. For instance, the parties can agree to attempt mediation during the arbitration if both sides feel that settlement is possible. If successful, mediation can lead to a faster resolution, avoiding the need for a full arbitration hearing.

Early Neutral Evaluation:

This involves getting an opinion from a neutral third party on the strengths and weaknesses of each side’s case early in the process. This evaluation can help the parties realistically assess their chances of success and may encourage settlement before much time and money is spent on the arbitration.

Cost Control

Cap on Costs:

One way to keep arbitration costs predictable is to agree upfront on cost caps for legal fees, arbitrator fees, and other administrative costs. This could involve agreeing on a flat fee with lawyers or a cap on the arbitrator’s fees.

Simple Procedures to Reduce Arbitration Costs and Time:

Avoid using overly formal or complex procedures, which can prolong the arbitration and increase costs. For example, adopting streamlined rules or limiting oral hearings to only critical issues can save time.

Additional Considerations to Reduce Arbitration Costs and Time

Bifurcation of Issues to Reduce Arbitration Costs and Time:

In some cases, splitting the arbitration into separate phases for different issues (e.g., liability and damages) may actually help simplify the process. This can prevent unnecessary evidence or argument on damages until the issue of liability is resolved.

Post-Hearing Efficiency:

The post-hearing phase can often be streamlined by limiting post-hearing submissions, agreeing on page limits, or even opting for summary awards where appropriate.

Conclusion to Reduce Arbitration Costs and Time

By using these detailed strategies, you can manage arbitration in a way that prioritizes speed, minimizes cost, and ensures that the process remains efficient without sacrificing fairness.