The American Arbitration Association (“AAA”) released recommendations for AAA Construction Advocates and Arbitrators with regard to best discovery practices and tips for Construction Arbitration. See American Arbitration Association Discovery Best Practices for Construction Arbitration (“Best Practices”). Through the AAA National Construction Dispute Resolution Committee, our own John Bulman played a key role in drafting these guidelines. The 7-page guideline provides a bullet point, practical summary of information exchange in arbitration. It is a helpful resource to counsel, clients, and arbitrators to understand the ground rules in an arbitration proceeding. In this post, I summarize some of the key takeaways from the Best Practices.
Generally, parties are entitled to examine an opposing parties documents; however, “the scope of documents should be narrowly tailored and proportionate to the disputes at hand.” To achieve this goal, parties should each submit detailed statement of claims and defenses as early as possible to narrow the issues, identify critical documents, and limit or avoid any disputes over document production. The parties should be encouraged to exchange such information candidly. Additionally, a scheduling order should establish deadlines for exchanging documents and can and should be strictly enforced absent good cause to deviate.
While site inspections can be beneficial in a construction dispute, arbitrators should consider whether the current condition of the project is such that an inspection would help understand and resolve the issues in the dispute. As an example, in the instance where faulty workmanship is alleged, but the work has since been remediated, a site inspection may not prove all that helpful and a more reasonable and cost effective option for the arbitrator is to review photographs of the faulty work. If a site visit is necessary, the practice tips for arbitrators include reviewing project photographs to familiarize with the issues and having the parties conduct the tour without attorney argument or commentary.
Due to “the growing use and sheer volume of email, CAD drawings and scheduling information in construction projects,” documents that are maintained and stored electronically should be provided in the same manner they are maintained, and be crafted to make searching the electronic data as economical and expeditious as possible. The practice tips note that, the arbitrator should ask a number of questions at the pre-hearing conference to understand the type of information maintained, its location, and accessibility. Moreover, prior to the pre-hearing conference the parties should discuss their Electronically Stored Information (“ESI”) protocol and attempt to come to an agreement. An arbitrator might even keep a template or sample ESI protocol to share with the parties and provide discretion to deviate from the template based on the size and complexity of the case.
As depositions are generally time consuming and costly, their use in arbitration should typically only be used when “clear and compelling grounds are demonstrated that depositions will promote (and not compromise) the speed and efficiency of the arbitration.” The practice tips provided for arbitrators include considering whether imposing a time limit on depositions and limiting the depositions to the primary fact-witnesses each party intends to call. Additionally, an arbitrator may deny the request to depose an expert witness when the expert witness provides a written report in advance of the hearing.
Regarding discovery disputes, in order to avoid unnecessary correspondence, briefing, and time, the Best Practices provides that arbitrators should make clear at the pre-hearing conference that parties are to engage in good-faith discussions to resolve discovery disputes before bringing them to the attention of the arbitrator. In the event that such a dispute does arise, the dispute should be resolved by telephonic conference at or near the time of dispute. For a practice tip, the best practices note that parties should be aware of “AAA’s Streamlined Panel Option, in which one arbitrator, rather than the full panel, may decide discovery disputes.”
Arbitrators are vested with the authority to order sanctions; however, in doing so, they should order them judiciously and avoid “drastic” sanctions whenever possible. The practice tips indicate that sometimes just “a reminder that the arbitration process envisions sanctions is sometimes all it takes to induce the parties to exercise restraint and responsibility.”
“Generally, the AAA rules do not contemplate third-party document discovery.” However, as some courts have construed Article 7 of the Federal Arbitration Act to permit an arbitrator to issue a subpoena to a third party to produce documents, the best practices posit that arbitrators “should be aware that this area is constantly evolving” and should ask the party requesting it to provide legal authority to do so. The practice tips note that the arbitrator should give consideration to the cost and burden on the third-party and that any subpoena should be narrowly tailored.
The Best Practices publication provides a helpful tool for practitioners and arbitrators to ensure that arbitration is more focused and efficient than court proceedings.