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Thursday, April 14, 2011

In the NYLJ: "Is Your Arbitration Clause Helping or Hurting You?"

Victoria Kummer writes in the NYLJ:

Arbitration is a creature of contract, and just as you would draft any other contract with provisions carefully tailored to your company's specific needs, so too should you put such effort into drafting your arbitration clause. As a party to the contract, you are empowered to structure the arbitration process in any way you please. If you have an appetite for protracted litigation and relish the possibility that disputes under your contract will involve a comprehensive airing of every conceivable claim, with far-reaching discovery and exhaustive interim motion practice—just leave your arbitration clause silent as to these issues.

If, however, you want to structure the process so as to achieve the swift, efficient resolution that is (or should be) the hallmark of arbitration, it would be wise to include any desired procedural limitations within the arbitration clause itself. Attempting to impose such limitations after the arbitration has already commenced can be significantly more difficult, requiring you (or more likely, your litigation counsel) to negotiate with a hostile adversary in the heat of battle, and often leads to drawn-out disputes over a range of procedural issues—especially discovery protocols and the money pit known as e-discovery or ESI.

Here's the complete article (subscription required).

[Meredith R. Miller

 

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Comments

Ms. Kummer follows standard rhetoric when overstating that arbitration is a creature of contract and ignores the sharp restrictions the Supreme Court has imposed on tailoring these clauses in cases such as Hall Street Associates. I just posted a new article on SSRN on documenting the gap between rhetoric and reality that this practice-piece reflects. Forthcoming in Duke Law Journal, it is called: Rhetoric versus Reality in Arbitration Jurisprudence: How the Supreme Court Flaunts and Flunks Contracts (and Why Contracts Teachers Need Not Teach the Cases). The link is here:
http://papers.ssrn.com/abstract_id=1809005.

Posted by: Lawrence Cunningham | Apr 14, 2011 8:22:27 PM

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