2013 Administered Arbitration Rules

PROCEDURES & CLAUSES
Administered Arbitration Rules (Effective July 1, 2013)

CPR’S FULL RANGE OF ARBITRATION OPTIONS

CPR MODEL CLAUSES FOR ADMINISTERED ARBITRATION

A. GENERAL AND INTRODUCTORY ADMINISTERED RULES

Rule 1: Scope of Application
Rule 2: Notices
Rule 3: Commencement of Arbitration
Rule 4: Representation

B. RULES WITH RESPECT TO THE TRIBUNAL

Rule 5: Selection of Arbitrator(s) by the Parties
Rule 6: Selection of Arbitrator(s) by CPR
Rule 7: Qualifications, Challenges and Replacement of Arbitrator(s)
Rule 8: Challenges to the Jurisdiction of the Tribunal

C. RULES WITH RESPECT TO THE CONDUCT OF THE ARBITRAL PROCEEDINGS

Rule 9: General Provisions
Rule 10: Applicable Law(s) and Remedies
Rule 11: Discovery
Rule 12: Evidence and Hearings
Rule 13: Interim Measures of Protection
Rule 14: Interim Measures of Protection by a Special Arbitrator
Rule 15: The Award
Rule 16: Failure to Comply with Administered Rules

D. RULES WITH RESPECT TO COSTS AND FEES

Rule 17: Arbitrator Fees, Expenses and Deposits
Rule 18: CPR Administrative Fees and Expenses
Rule 19: Fixing and Apportionment of Costs

E. MISCELLANEOUS ADMINISTERED RULES

Rule 20: Confidentiality
Rule 21: Settlement and Mediation
Rule 22: Actions Against CPR or Arbitrator(s)
Rule 23: Waiver
Rule 24: Interpretation and Application of Administered Rules

CPR’S FULL RANGE OF ARBITRATION OPTIONS

The International Institute for Conflict Prevention and Resolution (“CPR”) has long championed its Rules for Non-Administered Arbitration (Rev. 2007) as a means of providing for a fair, expeditious, and economical arbitration process. Hallmark features of non-administered or ad hoc rules include management of the process by the Tribunal and counsel, without the need for the involvement of a separate administering entity. To aid participants in a non-administered process when necessary, CPR offers customized services, such as arbitrator selection and a challenge procedure. For a full menu of such services, please refer to CPR’s website, www.cpradr.org.

CPR maintains its commitment to non-administered processes. However, mindful of the benefits that an arbitral institution can provide in appropriate cases, CPR has promulgated a set of administered arbitration rules to increase parties’ range of options. The CPR Rules for Administered Arbitration (July 1, 2013) provide parties with the same well-designed procedures and high quality arbitrators as CPR’s non-administered option, while also allowing the parties to avail themselves of CPR’s quality staff and resources when an administered process is desired.

Mediation and Other ADR Procedures. The following Rules are intended to govern administered arbitration proceedings. However, parties also may wish to incorporate pre-arbitral negotiation or mediation phases in their contract provisions. Parties desiring to use such procedures should consult the CPR Mediation Procedure and CPR’s Dispute Resolution Clauses (available on CPR’s website at www.cpradr.org).

To obtain a copy of any of our rules and procedures, or to find out more about our Dispute Resolution Services and fees, visit our website at www.cpradr.org or call CPR’s office at +1.212.949.6490.

CPR MODEL CLAUSES FOR ADMINISTERED ARBITRATION

Standard Contractual Provisions
The CPR Rules for Administered Arbitration (the “Administered Rules” or “Rules”) are intended in particular for use in complex commercial arbitrations where parties desire an administered process. They are designed to assure the expeditious and economical conduct of proceedings. The Administered Rules may be adopted by parties wishing to do so by using one of the following standard provisions:

A. Pre-Dispute Clause for Administered Arbitration
“Any dispute arising out of or relating to this contract, including the breach, termination or validity thereof, shall be finally resolved by arbitration in accordance with the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration (the “Administered Rules” or “Rules”) by (a sole arbitrator) (three arbitrators, of whom each party shall designate one, with the third arbitrator to be appointed by CPR) (three arbitrators, of whom each party shall designate one, with the third arbitrator to be designated by the two party-appointed arbitrators) (three arbitrators, of whom each party shall designate one in accordance with the screened appointment procedure provided in Rule 5.4) (three arbitrators, none of whom shall be designated by either party). The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of the arbitration shall be (city, state).”

B. Existing Dispute Submission Agreement for Administered Arbitration
“We, the undersigned parties, hereby agree to submit to arbitration in accordance with the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration (the “Administered Rules” or “Rules”) the following dispute:

We further agree that the above dispute shall be submitted to (a sole arbitrator) (three arbitrators, of whom each party shall designate one, with the third arbitrator to be appointed by CPR) (three arbitrators, of whom each party shall designate one, with the third arbitrator to be designated by the two party-appointed arbitrators) (three arbitrators, of whom each party shall designate one in accordance with the screened appointment procedure provided in Rule 5.4) (three arbitrators, none of whom shall be designated by either party). [We further agree that we shall faithfully observe this agreement and the Administered Rules and that we shall abide by and perform any award rendered by the arbitrator(s).] The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The place of arbitration shall be (city, state).”

A. GENERAL AND INTRODUCTORY ADMINISTERED RULES

Rule 1: Scope of Application **
1.1 Where the parties to a contract have provided for arbitration under the International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration (the “Administered Rules” or “Rules”), they shall be deemed to have made these Administered Rules a part of their arbitration agreement, except to the extent that they have agreed in writing, or on the record during the course of the arbitral proceeding, to modify these Administered Rules. Unless the parties otherwise agree, these Administered Rules, and any amendment thereof adopted by CPR, shall apply in the form in effect at the time the arbitration is commenced. If the parties have provided for CPR arbitration without specifying either the Non-Administered or Administered Rules, the CPR Administered Rules shall apply to any arbitration agreement dated July 1, 2013 or later.

1.2 These Administered Rules shall govern the arbitration except that where any of these Administered Rules is in conflict with a mandatory provision of applicable arbitration law, that provision of law shall prevail.

** Effective July 1, 2021 for any employment related matter, including claims brought by (a) employees, (b) applicants for employment, and (c) individuals who may be called “independent contractors” by the person or organization receiving services from the person if the dispute is about or relates to the work (or payment for the work) that the individual performs or would perform or the individual’s status as an employee or independent contractor, where the matter is referred to CPR for administration or selection of an arbitrator and where the Due Process Protections (see below) are applicable to the matter, CPR will only administer the matter under the CPR Administered Employment Arbitration Rules regardless of the rules contained in the arbitration agreement.

Due Process Protections

Rule 2: Notices
2.1 Notices or other communications required under these Administered Rules shall be in writing and delivered to the address specified in writing by the recipient or, if no address has been specified, to the last known business or residence address of the recipient. Notices and communications may be given by registered mail, courier, telex, facsimile transmission, email or any other means of telecommunication that provides a record thereof.

Notices and communications shall be deemed to be effective as of the date of receipt. Proof of transmission shall be deemed prima facie proof of receipt of any notice or communication given under these Rules.

2.2 Time periods specified by these Administered Rules or established by the Arbitral Tribunal (the “Tribunal”) shall start to run on the day following the day when a notice or communication is received, unless these Rules or the Tribunal shall specifically provide otherwise. If the last day of such period is an official holiday or a non-business day at the place where the notice or communication is received, the period is extended until the first business day which follows. Official holidays and non-business days occurring during the running of the period of time are included in calculating the period.

Rule 3: Commencement of Arbitration
3.1 The party commencing arbitration (the “Claimant”) shall deliver to the other party (the “Respondent”) a notice of arbitration with an electronic copy to CPR at the same time in accordance with Rule 3.3.

3.2 The notice of arbitration shall include in the text or in attachments thereto:

a. The full names, addresses, telephone numbers and email addresses for the parties and their counsel;

b. A demand that the dispute be referred to arbitration pursuant to these Rules;

c. The text of the arbitration clause or the separate arbitration agreement that is involved;

d. A statement of the general nature of the Claimant’s claim;

e. The relief or remedy sought; and

f. The name, address, telephone number and email address of the arbitrator designated for appointment by the Claimant, unless the parties have agreed that neither shall designate an arbitrator or that the party-designated arbitrators shall be appointed as provided in Rule 5.4.

3.3 Delivery of the notice of arbitration to CPR required under this Rule 3.1 shall be as specified on the CPR website. Simultaneous with delivery of the notice of arbitration to CPR, the Claimant shall make payment to CPR of the appropriate Filing Fee as provided in the Schedule of Administered Arbitration Costs on the CPR website. In the event the Claimant fails to comply with this requirement, CPR may fix a time limit within which the Claimant must make payment, failing which the file shall be closed without prejudice to the Claimant’s right to submit the same claim(s) at a later date in another notice of arbitration if permissible.

3.4 The date on which CPR is in receipt of both the notice of arbitration and Filing Fee shall, for all purposes, be deemed to be the date of the commencement of the arbitration (“Commencement Date”). CPR will determine the Commencement Date and so notify the parties.

3.5 CPR shall notify the Respondent of its time to deliver a notice of defense, which shall be 20 days after the Commencement Date.

3.6 The Respondent shall deliver to the Claimant a notice of defense by the date provided by CPR under Rule 3.5 with an electronic copy to CPR at the same time. Failure to deliver a notice of defense shall not delay the arbitration; in the event of such failure, all claims set forth in the notice of arbitration shall be deemed denied. Failure to deliver a notice of defense shall not excuse the Respondent from notifying the Claimant and CPR in writing, by the date provided by CPR under Rule 3.5, of the arbitrator designated for appointment by the Respondent, unless the parties have agreed that neither shall designate an arbitrator or that the party-designated arbitrators shall be appointed as provided in Rule 5.4.

3.7 The notice of defense shall include:

a. The full names, addresses, telephone numbers and email addresses for the parties and their counsel;

b. Any comment on the notice of arbitration that the Respondent may deem appropriate;

c. A statement of the general nature of the Respondent’s defense; and

d. The name, address, telephone number and email address of the arbitrator designated for appointment by the Respondent, unless the parties have agreed that neither shall designate an arbitrator or that the party-designated arbitrators shall be appointed as provided in Rule 5.4.

3.8 The Respondent may include in its notice of defense any counterclaim within the scope of the arbitration clause. If it does so, the counterclaim in the notice of defense shall include items (a), (b), (c), (d) and (e) of Rule 3.2.

3.9 If a counterclaim is asserted in accordance with Rule 3.8, CPR shall notify the Claimant of its time to deliver a response, which shall be 20 days after CPR’s receipt of the notice of defense and counterclaim. Such response shall have the same elements as provided in Rule 3.7(b) and (c) for the notice of defense. Failure to deliver a reply to a counterclaim shall not delay the arbitration; in the event of such failure, all counterclaims set forth in the notice of defense shall be deemed denied.

3.10 Claims or counterclaims within the scope of the arbitration clause may be freely added, amended or withdrawn prior to the appointment of the Tribunal and thereafter with the consent of the Tribunal. Notices of defense or replies to added or amended claims or counterclaims shall be delivered by the date CPR provides, which shall be within 20 days after CPR’s receipt of the addition or amendment or such other date as specified by CPR, or, if the Tribunal has been appointed, by the date specified by the Tribunal.

3.11 If a dispute is submitted to arbitration pursuant to a submission agreement, this Rule 3 shall apply to the extent that it is not inconsistent with the submission agreement.

Rule 4: Representation
4.1 The parties may be represented or assisted by persons of their choice.

4.2 Each party shall communicate the name, address, telephone number and email address, and function of such persons in writing to the other party, to the Tribunal and to CPR.

B. RULES WITH RESPECT TO THE TRIBUNAL

Rule 5: Selection of Arbitrator(s) by the Parties

5.1
a. Unless the parties have agreed otherwise in writing, the Tribunal shall consist of three arbitrators, one designated for appointment by each of the parties as provided in Rules 3.2 and 3.7 respectively, and a third who shall chair the Tribunal, selected as provided in Rule 5.2.

b. Unless otherwise agreed, any arbitrator not designated for appointment by a party shall be a member of the CPR Panels of Distinguished Neutrals (“CPR Panels”). Upon request, CPR will provide a list of candidates from the CPR Panels in accordance with the Rules.

c. Where a party has designated an arbitrator for appointment, CPR will query such candidate for their availability and request that the candidate disclose in writing any circumstances that might give rise to justifiable doubt regarding the candidate’s independence or impartiality as provided in Rule 7. Upon receipt, CPR shall circulate any disclosures made to the parties, and, within 10 days after receipt of that candidate’s disclosures, a party may object to the appointment of any candidate on grounds of lack of independence or impartiality by written and reasoned notice to CPR, with a copy to the other party. CPR shall decide the objection after providing the non-objecting party with an opportunity to comment on the objection. If there is no objection to the candidate, or if the objection is overruled by CPR, CPR shall appoint the candidate as a party-appointed arbitrator, and any subsequent challenges of that arbitrator, based on circumstances subsequently learned, shall be made and decided in accordance with the procedures set forth in Rules 7.6 -7.8. At its discretion, CPR may decide an objection made under this Rule 5.1(c) by referring it to a Challenge Review Committee pursuant to the CPR Challenge Protocol (excluding its fee requirement).

5.2
a. Unless the parties agree that the third arbitrator who shall chair the Tribunal be selected jointly by the party-appointed arbitrators, CPR shall select the third arbitrator as provided in Rule 6.

b. If the party-appointed arbitrators shall designate for appointment the third arbitrator who shall chair the Tribunal, such designation cannot occur until after appointment by CPR of both of the party-designated arbitrators. The party-appointed arbitrators shall inform CPR of the candidate designated by them to be the third arbitrator, whereupon CPR will query such candidate for availability and request such candidate to disclose in writing any circumstances that might give rise to justifiable doubt regarding the candidate’s independence or impartiality as provided in Rule 7. Upon receipt, CPR shall circulate any disclosures made to the parties, and, within 10 days after receipt of that candidate’s disclosures, a party may object to the appointment of such candidate on grounds of lack of independence or impartiality by written and reasoned notice to CPR, with a copy to the other party. CPR shall decide the objection after providing the non-objecting party with an opportunity to comment. If there is no objection to the candidate, or if the objection is overruled by CPR, CPR shall appoint the candidate as the third arbitrator, and any subsequent challenges of that arbitrator, based on circumstances subsequently learned, shall be made and decided in accordance with the procedures set forth in Rules 7.6 - 7.8. At its discretion, CPR may decide an objection under this Rule 5.2 (b) by referring it to a Challenge Review Committee pursuant to the CPR Challenge Protocol (excluding its fee requirement). In the event that the party-appointed arbitrators are unable to agree on a third arbitrator within 20 days of CPR’s appointment of the second arbitrator, the third arbitrator shall be selected by CPR as provided in Rule 6.2.

5.3 If the parties have agreed on a Tribunal consisting of a sole arbitrator or of three arbitrators none of whom shall be designated for appointment by either party, the parties shall attempt jointly to designate such arbitrator(s) within 20 days after the notice of defense provided for in Rule 3.6 is due. CPR will query such jointly designated candidate(s) in accordance with the procedure provided for in Rule 5.1(c). The parties may extend their selection process until one or both of them have concluded that a deadlock has been reached, but in no event for more than 30 days after the notice of defense provided for in Rule 3.6 is due. In the event the parties are unable to designate the arbitrator(s) within the extended selection period, the arbitrator(s) shall be selected as provided in Rule 6.2.

5.4 If the parties have agreed on a Tribunal consisting of three arbitrators, two of whom are to be designated by the parties without knowing which party designated each of them, as provided for in this Rule 5.4, CPR shall conduct a “screened” selection of party-designated arbitrators as follows:

a. CPR will provide each party with a copy of a list of candidates from the CPR Panels together with confirmation of their availability to serve as arbitrators and disclosure of any circumstances that might give rise to justifiable doubt regarding their independence or impartiality, as provided in Rule 7. Within 10 days after the receipt of the CPR list, each party shall designate from the list three candidates, in order of preference, for its party-designated arbitrator, and so notify CPR and the other party in writing.

b. Within the same 10-day period after receipt of the CPR list, a party may also object to the appointment of any candidate on the list on grounds of lack of independence or impartiality by written and reasoned notice to CPR, with a copy to the other party. CPR shall decide the objection after providing the non-objecting party with an opportunity to comment. If there is no objection to the first candidate designated by a party, or if the objection is overruled by CPR, CPR shall appoint the candidate as the arbitrator, and any subsequent challenges of that arbitrator, based on circumstances subsequently learned, shall be made and decided in accordance with the procedures set forth in Rules 7.6 - 7.8. At its discretion, CPR may decide an objection under this Rule 5.4 (b) by referring it to a Challenge Review Committee pursuant to the CPR Challenge Protocol (excluding its fee requirement).

c. If the independence or impartiality of the first candidate designated by a party is successfully challenged, CPR will appoint the subsequent candidate designated by that party, in order of the party’s indicated preference, provided CPR does not sustain any objection made to the appointment of that candidate.

d. Neither CPR nor the parties shall advise or otherwise provide any information or indication to any arbitrator candidate or appointed arbitrator as to which party selected either of the party-designated arbitrators. No party or anyone acting on its behalf shall have any ex parte communications relating to the case with any arbitrator candidate or appointed arbitrator pursuant to this Rule 5.4.

e. The chair of the Tribunal will be appointed by CPR in accordance with the procedure set forth in Rule 6.2, which shall proceed concurrently with the procedure for appointing the party-designated arbitrators provided in subsections (a)-(d) above.

5.5 Where the arbitration agreement entitles each party to designate an arbitrator but there is more than one Claimant or Respondent to the dispute, and either the multiple Claimants or the multiple Respondents do not jointly designate an arbitrator, CPR shall appoint all of the arbitrators as provided in Rule 6.2.

Rule 6: Selection of Arbitrator(s) by CPR
6.1 Whenever (i) a party has failed to designate its arbitrator to be appointed by CPR; (ii) the parties, acting jointly, have failed to designate the arbitrator(s) for appointment by CPR; (iii) the parties have agreed that the party-designated arbitrators who have been appointed by CPR shall designate the third arbitrator and such arbitrators have failed to designate the third arbitrator; (iv) the parties have provided that one or more arbitrator(s) shall be appointed by CPR; or (v) the multi-party nature of the dispute calls for CPR to appoint all members of a three-member Tribunal pursuant to Rule 5.5, the arbitrator(s) required to complete the Tribunal shall be selected as provided in this Rule 6.

6.2 Except where a party has failed to designate the arbitrator to be appointed by it, CPR shall proceed as follows:

a. CPR shall jointly convene the parties by telephone to discuss the selection of the arbitrator(s).

b. Thereafter, CPR shall provide to the parties a list of candidates, from the CPR Panels, of not less than five candidates if one arbitrator is to be selected, and of not less than seven candidates if two or three arbitrators are to be selected. Such list shall include a brief statement of each candidate’s qualifications, availability and disclosures in writing of any circumstances that might give rise to justifiable doubt regarding the candidate’s independence or impartiality as provided in Rule 7. Each party shall number the candidates in order of preference, shall note any objection it may have to any candidate, and shall deliver the list so marked to CPR, which, on agreement of the parties, shall circulate the delivered lists to the parties. Any party failing without good cause to return the candidate list so marked within 10 days after receipt shall be deemed to have assented to all candidates listed thereon. CPR shall appoint as arbitrator(s) the nominee(s) willing to serve for whom the parties collectively have indicated the highest preference and who appear to meet the standards set forth in Rule 7. If a tie should result between two candidates, CPR may appoint either candidate. If this procedure for any reason should fail to result in appointment of the required number of arbitrators or if a party fails to participate in this procedure, CPR shall appoint a person or persons whom it deems qualified to fill any remaining vacancy.

6.3 Where a party has failed to designate the arbitrator to be appointed by it, CPR shall appoint a person whom it deems qualified to serve as such arbitrator.

Rule 7: Qualifications, Challenges and Replacement of Arbitrator(s)

7.1 Each arbitrator shall be independent and impartial.

7.2 By accepting appointment, each arbitrator shall be deemed to be bound by these Administered Rules and any modification thereof agreed to by the parties, and to have represented that he or she has the time available to devote to the expeditious process contemplated by these Administered Rules.

7.3 Each arbitrator shall disclose in writing to CPR and the parties prior to appointment in accordance with the Rules, and also promptly upon there arising during the course of the arbitration, any circumstances that might give rise to justifiable doubt regarding the arbitrator’s independence or impartiality. Such circumstances include bias, interest in the result of the arbitration, and past or present relations with a party or its counsel.

7.4 No party or anyone acting on its behalf shall have any ex parte communications concerning any matter relating to the proceeding with any arbitrator or arbitrator candidate, except that a party may advise an arbitrator candidate being considered for designation as its appointed arbitrator of the general nature of the case and discuss the candidate’s qualifications, availability, and independence and impartiality with respect to the parties, and a party also may confer with its designated arbitrator after the arbitrator’s appointment by CPR regarding the selection of the chair of the Tribunal. As provided in Rule 5.4(d), no party or anyone acting on its behalf shall have any ex parte communications relating to the case with any arbitrator candidate designated or appointed pursuant to Rule 5.4.

7.5 Any arbitrator may be challenged if circumstances exist or arise that give rise to justifiable doubt regarding that arbitrator’s independence or impartiality, provided that a party may challenge an arbitrator whom it has designated only for reasons of which it becomes aware after the designation has been made.

7.6 A party may challenge an appointed arbitrator only by a notice in writing to CPR, with a copy to the Tribunal and the other party, in accordance with the CPR Challenge Protocol (excluding its fee requirement) given no later than 15 days after the challenging party (i) receives notification of the appointment of that arbitrator, or (ii) becomes aware of the circumstances specified in Rule 7.5, whichever shall last occur. The notice shall state the reasons for the challenge with specificity. The notice shall not be sent to the Tribunal when the challenged arbitrator is a party-designated arbitrator selected as provided in Rule 5.4; in that event, CPR may provide each member of the Tribunal with an opportunity to comment on the substance of the challenge without disclosing the identity of the challenging party.

7.7 When an arbitrator has been challenged by a party, the other party may agree to the challenge or the arbitrator may voluntarily withdraw. Neither of these actions implies acceptance of the validity of the challenge.

7.8 If neither agreed disqualification nor voluntary withdrawal occurs, the challenge shall be decided by CPR in accordance with the CPR Challenge Protocol (excluding its fee requirement) after providing the non-challenging party and each member of the Tribunal with an opportunity to comment on the challenge in accordance with these Rules.

7.9 In the event of death, resignation or successful challenge of an arbitrator not designated by a party, a substitute arbitrator shall be appointed pursuant to the procedure by which the arbitrator being replaced was selected. In the event of the death, resignation or successful challenge of an arbitrator designated by a party, that party may designate a substitute arbitrator; provided, however, that should that party fail to notify CPR and the other party of the substitute designation within 20 days from the date on which it becomes aware that the opening arose, that party’s right of designation shall lapse, and CPR shall appoint a substitute arbitrator forthwith in accordance with these Rules.

7.10 In the event that an arbitrator fails to act or is de jure or de facto prevented from duly performing the functions of an arbitrator, the procedures provided in Rule 7.9 shall apply to the selection of a replacement. If the parties do not agree on whether the arbitrator has failed to act or is prevented from performing the functions of an arbitrator, either party may request CPR to make that determination forthwith.

7.11 If the sole arbitrator or the chair of the Tribunal is replaced, the successor shall decide the extent to which any hearings held previously shall be repeated. If any other arbitrator is replaced, the Tribunal in its discretion may require that some or all prior hearings be repeated.

7.12 If an arbitrator on a three-person Tribunal fails to participate in the arbitration, the two other arbitrators shall have the power in their sole discretion to continue the arbitration and to make any decision, ruling or award, notwithstanding the failure of the third arbitrator to participate, unless the parties agree otherwise. In determining whether to continue the arbitration or to render any decision, ruling or award without the participation of an arbitrator, the two other arbitrators shall take into account the stage of the arbitration, the reason, if any, expressed by the third arbitrator for such non-participation, and such other matters as they consider appropriate in the circumstances of the case. In the event that the two other arbitrators determine not to continue the arbitration without the participation of a third arbitrator, the procedures provided in Rule 7.9 shall apply to the selection of a replacement.

Rule 8: Challenges to the Jurisdiction of the Tribunal
8.1 The Tribunal shall have the power to hear and determine challenges to its jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.

8.2 The Tribunal shall have the power to determine the existence, scope or validity of the contract of which an arbitration clause forms a part. For the purpose of challenges to the jurisdiction of the Tribunal, the arbitration clause shall be considered as separable from any contract of which it forms a part.

8.3 Any challenges to the jurisdiction of the Tribunal, except challenges based on the award itself, shall be made no later than the notice of defense or, with respect to a counterclaim, the reply to the counterclaim; provided, however, that if a claim or counterclaim is later added or amended, a challenge to jurisdiction over such claim or counterclaim must be made not later than the response to such claim or counterclaim as provided under these Rules.

C. RULES WITH RESPECT TO THE CONDUCT OF THE ARBITRAL PROCEEDINGS

Rule 9: General Provisions
9.1 Subject to these Rules, the Tribunal may conduct the arbitration in such manner as it shall deem appropriate. The chair shall be responsible for the organization of arbitral conferences and hearings and arrangements with respect to the functioning of the Tribunal, and shall keep CPR informed of such arrangements throughout the proceedings.

9.2 The proceedings shall be conducted in an expeditious manner. The Tribunal is empowered to impose time limits it considers reasonable on each phase of the proceeding, including without limitation, the time allotted to each party for presentation of its case and for rebuttal. In setting time limits, the Tribunal should bear in mind its obligation to manage the proceeding firmly in order to complete proceedings as economically and expeditiously as possible.

9.3 The Tribunal shall hold an initial pre-hearing conference for the planning and scheduling of the proceeding. Such conference shall be held promptly after the constitution of the Tribunal, unless the Tribunal is of the view that further submissions from the parties are appropriate prior to such conference. The objective of this conference shall be to discuss all elements of the arbitration with a view to planning for its future conduct. Following the initial pre-hearing conference, a schedule for the conduct of the arbitration should be issued as soon thereafter as appropriate. Matters to be considered in the initial pre-hearing conference may include, inter alia, the following:

a. Procedural matters (such as setting specific time limits for, and manner of, any required discovery; the desirability of bifurcation or other separation of the issues in the arbitration; the desirability and practicability of consolidating the arbitration with any other proceeding; the scheduling of conferences and hearings; the scheduling of pre-hearing memoranda; the need for and type of record of conferences and hearings, including the need for transcripts; the amount of time allotted to each party for presentation of its case and for rebuttal; the mode, manner and order for presenting proof; the need for expert witnesses and how expert testimony should be presented; and the necessity for any on-site inspection by the Tribunal);

b. The early identification and narrowing of the issues in the arbitration;

c. The possibility of stipulations of fact and admissions by the parties solely for purposes of the arbitration, as well as simplification of document authentication;

d. The possibility of appointment of a neutral expert by the Tribunal; and

e. The possibility of the parties engaging in settlement negotiations, with or without the assistance of a mediator. After the initial conference, further pre-hearing or other conferences may be held as the Tribunal deems appropriate.

9.4 In order to define the issues to be heard and determined, the Tribunal may, inter alia, make pre-hearing orders and instruct the parties to file more detailed statements of claim and of defense and pre-hearing memoranda.

9.5 Unless the parties have agreed upon the place of arbitration, the Tribunal shall fix the place of arbitration based upon the contentions of the parties and the circumstances of the arbitration. The award shall be deemed made at such place. The Tribunal may schedule meetings and hold hearings wherever it deems appropriate.

9.6 Except as otherwise provided in these Administered Rules, only electronic copies of filings, communications and other documents shall be sent to CPR; hard copies of filings or other documents sent to the Tribunal and/or the other party should not be sent to CPR in the ordinary course.

Rule 10: Applicable Law(s) and Remedies
10.1 The Tribunal shall apply the substantive law(s) or rules of law designated by the parties as applicable to the dispute. Failing such a designation by the parties, the Tribunal shall apply such law(s) or rules of law as it determines to be appropriate.

10.2 Subject to Rule 10.1, in arbitrations involving the application of contracts, the Tribunal shall decide in accordance with the terms of the contract and shall take into account usages of the trade applicable to the contract.

10.3 The Tribunal may grant any remedy or relief, including but not limited to specific performance of a contract, which is within the scope of the agreement of the parties and permissible under the law(s) or rules of law applicable to the dispute.

10.4 The Tribunal may award such pre-award and post-award interest, simple or compound, as it considers appropriate, taking into consideration the contract and applicable law.

Rule 11: Discovery
The Tribunal may require and facilitate such discovery as it shall determine is appropriate in the circumstances, taking into account the needs of the parties and the desirability of making discovery expeditious and cost-effective. The Tribunal may issue orders to protect the confidentiality of proprietary information, trade secrets and other sensitive information disclosed in discovery.

Rule 12: Evidence and Hearings
12.1 The Tribunal shall determine the manner in which the parties shall present their cases. Unless otherwise determined by the Tribunal or agreed by the parties, the presentation of a party’s case shall include the submission of a pre-hearing memorandum including the following elements:

a. A statement of facts;

b. A statement of each claim being asserted;

c. A statement of the applicable law and authorities upon which the party relies;

d. A statement of the relief requested, including the basis for any damages claimed; and

e. A statement of the nature and manner of presentation of the evidence, including the name, capacity and subject of testimony of any witnesses to be called and an estimate of the amount of time required for each witness’s direct testimony.

12.2 If either party so requests or the Tribunal so directs, a hearing shall be held for the presentation of evidence and oral argument. Testimony may be presented in written and/or oral form as the Tribunal may determine is appropriate. The Tribunal is not required to apply any rules of evidence used in judicial proceedings, provided, however, that the Tribunal shall apply any lawyer-client privilege and work product immunity it deems applicable. The Tribunal shall determine the applicability of any privilege or immunity and the admissibility, relevance, materiality and weight of the evidence offered.

12.3 The Tribunal, in its discretion, may require the parties to produce evidence in addition to that initially offered. It may also appoint neutral experts whose testimony shall be subject to cross-examination and rebuttal.

12.4 The Tribunal shall determine the manner in which witnesses are to be examined. The Tribunal shall have the right to exclude witnesses from hearings during the testimony of other witnesses.

Rule 13: Interim Measures of Protection
13.1 At the request of a party, the Tribunal may take such interim measures as it deems necessary, including measures for the preservation of assets, the conservation of goods or the sale of perishable goods. The Tribunal may require appropriate security as a condition of ordering such measures.

13.2 A request for interim measures by a party to a court shall not be deemed incompatible with the agreement to arbitrate or as a waiver of that agreement.

Rule 14: Interim Measures of Protection by a Special Arbitrator
14.1 Unless otherwise agreed by the parties, this Rule 14 shall be deemed part of any arbitration clause or agreement that provides for arbitration under these Administered Rules.

14.2 Prior to the constitution of the Tribunal, any party may request that interim measures be granted under this Administered Rule against any other party by a special arbitrator appointed for that purpose.

14.3 Interim measures under this Administered Rule are requested by written application to CPR, entitled “Request for Interim Measures of Protection by a Special Arbitrator,” describing in reasonable detail the relief sought, the party against whom the relief is sought, the grounds for the relief, and, if practicable, the evidence and law supporting the request. The request shall be delivered in accordance with Administered Rule 2.1, and shall certify that all other parties affected have been notified of the request or explain the steps taken to notify such parties.

14.4 The request for interim measures by a special arbitrator shall be accompanied by an initial deposit payable to CPR as provided in the Schedule of Administered Arbitration Costs on the CPR website. CPR shall promptly determine whether any further deposit is due to cover the fee of CPR and the remuneration of the special arbitrator, which amount shall be paid within the time period determined by CPR.

14.5 If the parties agree upon a special arbitrator within one business day of the request, that arbitrator shall be appointed by CPR subject to Rule 14.6. If there is no such timely agreement, CPR shall appoint a special arbitrator from a list of arbitrators maintained by CPR for that purpose. To the extent practicable, CPR shall appoint the special arbitrator within one business day of CPR’s receipt of the application for interim measures under this Administered Rule. The special arbitrator’s fee shall be determined by CPR in consultation with the special arbitrator. The special arbitrator’s fee and reasonable out-of-pocket expenses shall be paid from the deposit made with CPR.

14.6 Prior to appointment, a special arbitrator candidate shall disclose to CPR any circumstances that might give rise to justifiable doubt regarding his or her independence or impartiality within the meaning of Administered Rule 7. Any challenge to the appointment of a special arbitrator must be made within one business day of the challenging party’s receipt of CPR’s notification of the appointment of the arbitrator and the circumstances disclosed. A special arbitrator may be challenged on any ground for challenging arbitrators generally under Administered Rule 7. To the extent practicable, CPR shall rule on the challenge within one business day after CPR’s receipt of the challenge. CPR’s ruling on the challenge shall be final.

14.7 In the event of death, resignation or successful challenge of a special arbitrator, CPR shall appoint a replacement forthwith in accordance with the procedures set forth in Administered Rules 14.5 and 14.6.

14.8 The special arbitrator shall determine the procedure to be followed, which shall include, whenever possible, reasonable notice to, and an opportunity for hearing (either in person, by teleconference or other appropriate means) for all affected parties. The special arbitrator shall conduct the proceedings as expeditiously as possible, and shall have the powers vested in the Tribunal under Administered Rule 8, including the power to rule on his or her own jurisdiction and the applicability of this Administered Rule 14.

14.9 The special arbitrator may grant such interim measures as he or she deems necessary, including but not limited to measures for the preservation of assets, the conservation of goods or the sale of perishable goods.

14.10 The ruling on the request for interim measures shall be made by award or order, and the special arbitrator may state in such award or order whether or not the special arbitrator views the award or order as final for purposes of any judicial proceedings in connection therewith. The award or order may be made conditional upon the provision of security or any act or cessation of any act specified in the award or order. The award or order may provide for the payment of a specified amount in case of noncompliance with its terms.

14.11 The award or order shall specify the relief awarded or denied, shall determine the cost of the proceedings, which includes CPR’s administrative fees and expenses, the special arbitrator’s fee and expenses as determined by CPR, and apportion such costs among the parties as the special arbitrator deems appropriate. The special arbitrator may also apportion the parties’ reasonable attorneys’ fees and expenses in the award or order or in a supplementary award or order. Unless the parties agree otherwise, the award or order shall state the reasoning on which the award or order rests as the special arbitrator deems appropriate.

14.12 Prior to the execution of any special arbitrator’s award, the special arbitrator shall send a copy of the award in draft form to CPR for a limited review for format, clerical, typographical or computational errors, or any errors of a similar nature in the award. CPR shall promptly review such award, suggest any corrections to the special arbitrator and the special arbitrator shall as soon as possible thereafter deliver executed copies of the award to CPR, which shall promptly deliver the award to the parties, provided no fees, expenses and other charges incurred in accordance with the Schedule of Administered Arbitration Costs are outstanding.

14.13 A request for interim measures by a party to a court shall not be deemed incompatible with the agreement to arbitrate, including the agreement to this Administered Rule 14, or as a waiver of that agreement.

14.14 The special arbitrator’s award or order shall remain in effect until modified or vacated by the special arbitrator or the Tribunal. The special arbitrator may modify or vacate the award or order for good cause. If the Tribunal is constituted before the special arbitrator has rendered an award or order, the special arbitrator shall retain jurisdiction to render such award or order unless and until the Tribunal directs otherwise. Once the Tribunal has been constituted, the Tribunal may modify or vacate the award or order rendered by the special arbitrator.

14.15 The special arbitrator shall not serve as a member of the Tribunal unless the parties agree otherwise.

Rule 15: The Award
15.1 The Tribunal may make final, interim, interlocutory and partial awards. With respect to any interim, interlocutory or partial award, the Tribunal may state in its award whether or not it views the award as final for purposes of any judicial proceedings in connection therewith.

15.2 All awards shall be in writing and shall state the reasoning on which the award rests unless the parties agree otherwise. The award shall be deemed to be made at the seat of arbitration and shall contain the date on which the award was made. When there are three arbitrators, the award shall be made and signed by at least a majority of the arbitrators.

15.3 A member of the Tribunal who does not join in an award may issue a dissenting opinion. Such opinion shall not constitute part of the award.

15.4 Prior to execution of any award, the Tribunal shall send a copy of the award in draft form to CPR for a limited review for format, clerical, typographical or computational errors, or any errors of a similar nature in the award. CPR shall promptly review such award, and suggest any corrections to the Tribunal.

15.5 Thereafter as soon as possible, but in no event more than 3 days, the Tribunal shall deliver executed copies of the award and of any dissenting opinion to CPR, which shall promptly deliver the award and any dissenting opinion to the parties provided no fees, expenses and other charges incurred in accordance with the Schedule of Administered Arbitration Costs are outstanding.

15.6 Within 15 days after receipt of the award, either party, with notice to the other party and CPR, may request the Tribunal to clarify the award; to correct any clerical, typographical or computational errors, or any errors of a similar nature in the award; or to make an additional award as to claims or counterclaims presented in the arbitration but not determined in the award. The Tribunal shall make any clarification, correction or additional award requested by either party that it deems justified within 30 days after receipt of such request. Within 15 days after delivery of the award to the parties or, if a party requests a clarification, correction or additional award, within 30 days after receipt of such request, the Tribunal may make such corrections and additional awards on its own initiative as it deems appropriate. All clarifications, corrections, and additional awards shall be in writing, shall be submitted directly to CPR by the Tribunal for delivery by CPR to the parties, and the provisions of this Administered Rule 15 shall apply to them.

15.7 The award shall be final and binding on the parties, and the parties will undertake to carry out the award without delay. If an interpretation, correction or additional award is requested by a party, or a correction or additional award is made by the Tribunal on its own initiative as provided in Administered Rule 15.6, the award shall be final and binding on the parties when such clarification, correction or additional award is issued by CPR or upon the expiration of the time periods provided in Administered Rule 15.6 for such clarification, correction or additional award to be made, whichever is earlier.

15.8
a. The dispute should in most circumstances be submitted to the Tribunal for decision within six months after the initial pre-hearing conference required by Administered Rule 9.3. The final award should in most circumstances be submitted by the Tribunal to CPR within 30 days after the close of the hearing and thereafter CPR should render the award to the parties promptly. The Tribunal and CPR shall use their best efforts to comply with this schedule.

b. CPR must approve any scheduling orders or extensions that would result in a final award being rendered more than 12 months after the initial pre-hearing conference required by Administered Rule 9.3. When such approval is required, CPR in its discretion may convene a call with the parties and arbitrators to discuss factors relevant to such request.

Rule 16. Failure to Comply with Administered Rules
Whenever a party fails to comply with these Administered Rules, or any order of the Tribunal pursuant to these Administered Rules, in a manner deemed material by the Tribunal, the Tribunal, if appropriate, shall fix a reasonable period of time for compliance and, if the party does not comply within said period, the Tribunal may impose a remedy it deems just, including an award on default. Prior to entering an award on default, the Tribunal shall require the non-defaulting party to produce evidence and legal argument in support of its contentions as the Tribunal may deem appropriate. The Tribunal may receive such evidence and argument without the defaulting party’s presence or participation.

D. RULES WITH RESPECT TO COSTS AND FEES

Rule 17. Arbitrator Fees, Expenses and Deposits
17.1 Each arbitrator shall be compensated on a reasonable basis determined at the time of appointment for serving as an arbitrator and shall be reimbursed for any reasonable travel and other expenses. The compensation for each arbitrator should be fully disclosed to all Tribunal members and parties. If there is a disagreement concerning the terms of compensation, an appropriate rate shall be established with the arbitrator by CPR and confirmed in writing to the parties. The parties shall be jointly and severally liable for such fees and expenses.

17.2 The Tribunal shall determine the necessary advances on the arbitrator(s) fees and expenses and advise CPR which, unless otherwise agreed by the parties, shall invoice the parties in equal shares. The amount of any advances to cover arbitrator fees and expenses may be subject to readjustment at any time during the arbitration. Such funds shall be held and disbursed in a manner CPR deems appropriate. An accounting will be rendered to the parties and any unexpended balance returned at the conclusion of the arbitration as may be appropriate.

17.3 If the requested advances are not paid in full within 10 days after receipt of the request, CPR shall so inform the parties and the proceeding may be suspended or terminated unless the other party pays the non-paying party’s share subject to any award on costs.

Rule 18. CPR Administrative Fees and Expenses
18.1 In addition to the CPR Filing Fee, CPR shall charge a Case Administrative Fee (“Administrative Fee”) as set forth in the Schedule of Administered Arbitration Costs on the CPR website. CPR reserves the right to adjust the Administrative Fee based on developments in the proceeding.

18.2 Unless otherwise agreed by the parties, CPR shall invoice the parties in equal shares for the Administrative Fees. Payment shall be due on receipt unless other arrangements are authorized by CPR. The parties shall be jointly and severally liable to CPR for the Administrative Fee. In the event a party fails to pay as provided in the invoice, the proceeding shall be suspended or terminated unless the other party pays the non-paying party’s share subject to any award on costs.

Rule 19. Fixing and Apportionment of Costs
19.1 The Tribunal shall fix the costs of arbitration in its award. The costs of arbitration include:

a. The fees and expenses of members of the Tribunal;
b. The costs of expert advice and other assistance engaged by the Tribunal;
c. The travel and other expenses of witnesses to such extent as the Tribunal may deem appropriate;
d. The costs for legal representation and assistance and experts incurred by a party to such extent as the Tribunal may deem
appropriate;
e. The CPR Administrative Fee with respect to the arbitration;
f. The costs of a transcript; and
g. The costs of meeting and hearing facilities.

19.2 Subject to any agreement between the parties to the contrary, the Tribunal may apportion the costs of arbitration between or among the parties in such manner as it deems reasonable, taking into account the circumstances of the case, the conduct of the parties during the proceeding, and the result of the arbitration.

E. MISCELLANEOUS ADMINISTERED RULES

Rule 20: Confidentiality
Unless the parties agree otherwise, the parties, the arbitrators and CPR shall treat the proceedings, any related discovery and the decisions of the Tribunal, as confidential, except in connection with judicial proceedings ancillary to the arbitration, such as a judicial challenge to, or enforcement of, an award, and unless otherwise required by law or to protect a legal right of a party. To the extent possible, any specific issues of confidentiality should be raised with and resolved by the Tribunal.

Rule 21: Settlement and Mediation
21.1 Either party may propose settlement negotiations to the other party at any time. The Tribunal may suggest that the parties explore settlement at such times as the Tribunal may deem appropriate.

21.2 With the consent of the parties, the Tribunal at any stage of the proceeding may request CPR to arrange for mediation of the claims asserted in the arbitration by a mediator acceptable to the parties. The mediator shall be a person other than a member of the Tribunal. Unless the parties agree otherwise, any such mediation shall be conducted under the CPR Mediation Procedure.

21.3 The Tribunal will not be informed of any settlement offers or other statements made during settlement negotiations or a mediation between the parties, unless both parties consent.

21.4 If the parties settle the dispute before an award is made, the Tribunal shall terminate the arbitration and so inform CPR. If requested by all parties and accepted by the Tribunal, the Tribunal may record the settlement in the form of an award made by consent of the parties. The Tribunal is not obliged to give reasons for such an award. CPR shall issue the award.

Rule 22: Actions Against CPR or Arbitrator(s)
Neither CPR nor any arbitrator shall be liable to any party for any act or omission in connection with any arbitration conducted under these Administered Rules.

Rule 23: Waiver
A party knowing of a failure to comply with any provision of these Administered Rules, or any requirement of the arbitration agreement or any direction of the Tribunal, and neglecting to state its objections promptly, waives any objection thereto.

Rule 24: Interpretation and Application of Administered Rules
The Tribunal shall interpret and apply these Administered Rules insofar as they relate to the Tribunal’s powers and duties. When there is more than one member on the Tribunal and a difference arises among them concerning the meaning or application of these Administered Rules, that difference shall be decided by a majority vote.

All other Rules shall be interpreted and applied by CPR.

General Commentary for CPR Administered Arbitration Rules

The primary objectives of arbitration are to arrive at a just and enforceable result, based on a private procedure that is:

• fair;
• expeditious;
• economical; and
• less burdensome and adversarial than litigation.

The above objectives are most likely to be achieved if the parties and their attorneys:

• adopt well-designed rules of procedure;
• select skilled arbitrators who are able and willing to actively manage the process;
• limit the issues to focus on the core of the dispute; and
• cooperate on procedural matters even while acting as effective advocates on substantive issues.

The International Institute for Conflict Prevention and Resolution (“CPR”) Rules for Administered Arbitration (the “Administered Rules” or “Rules” ) (Eff. July 1, 2013) were developed by CPR to provide procedures to facilitate the conduct of administered arbitration fairly, expeditiously and economically. The Rules are designed to be easily comprehended. The Rules are intended, in particular, for complex cases, but are suitable regardless of the complexity of the case.

Every disputant wants to have a reasonable opportunity to develop and present its case. Parties that choose arbitration over litigation do so in large part out of a need or desire for a proceeding that is speedy and economical – factors which tend to go hand in hand. The Rules were designed with each of these objectives in mind.

The complexity of cases will vary greatly. In rules of general application, it is not appropriate to fix hard and fast deadlines. Rule 15.8 (a) commits the parties and the arbitrator(s) to use their best efforts to assure that the dispute will be submitted to the Tribunal for decision within six months after the initial pre-hearing conference, and that the final award will be submitted to CPR within 30 days after the close of the hearing. Rule 15.8(b) provides that CPR must approve any scheduling orders or extensions that would result in a final award being rendered more than 12 months after the initial pre-hearing conference. Rule 9.2 empowers the arbitrator(s) to establish time limits for each phase of the proceeding, including specifically the time allotted to each party for presentation of its case and for rebuttal.

Counsel are expected to cooperate fully with the Tribunal and with each other to assure that the proceeding will be conducted with civility in an efficient, expeditious and economical manner. Rule 19.2 empowers the arbitrators in apportioning costs to take into account, inter alia, “the circumstances of the case” and “the conduct of the parties during the proceeding.” This broad power is intended to permit the arbitrators to apportion a greater share of costs than they otherwise might to a party that has employed tactics the arbitrators consider dilatory, or in other ways has failed to cooperate in assuring the efficient conduct of the proceeding.

Types of Disputes
The Rules are designed to encompass disputes of any nature, including, for example, commercial disputes, construction disputes, disputes between manufacturers and distributors or franchisees, insurance disputes and disputes between joint venturers. The Rules may also be adopted by parties that do not have a contractual or other business relationship. The Rules may even be employed to adjudicate a dispute between a government agency and a private entity, subject to any legal restraints on that government’s submission to arbitration. The parties may find it appropriate to modify the Rules to adapt the Rules to a specific type of dispute.

While most arbitrations involve two parties, the Rules are also suitable for proceedings among three or more parties. References to “Claimant,” “Respondent” and “other party” should be construed to encompass multiple Claimants, Respondents or other parties in such multi-party proceedings. Where necessary, the Rules specifically address particular issues raised in the multiparty context. For example, Rule 5.5 deals with the constitution of the Tribunal where the arbitration agreement entitles each party to appoint an arbitrator when there is more than one Claimant or Respondent to the dispute.

Administered vs. Non-Administered Arbitration
The principal functions normally performed by an organization administering arbitration proceedings include:

• providing a set of rules which the parties can adopt in a pre-dispute agreement or for an existing dispute;
• providing staff to render services required for case handling;
• providing lists of persons from which arbitrators may be chosen;
• appointing the arbitrator(s) if necessary;
• deciding arbitrator conflict of interest challenges if necessary;
• coordinating billing for arbitrator fees and expenses; and
• conducting limited review of awards.

The charges of administering organizations typically are related to the amount in dispute, but rates vary. Many arbitration practitioners and arbitrators see a need for administered arbitration, but others favor non-administered or “ad hoc” arbitration. Whether an administered or ad hoc process is used depends on a range of factors, including sophistication of parties and counsel, and administrative fees charged.

Since the release of its first set of CPR Rules for Non-Administered Arbitration, CPR has offered party-administered or ad hoc arbitrations as opposed to institutionally administered proceedings. This stance has been based upon CPR’s confidence in the users of ADR to manage the process with the arbitrator. However, CPR has always been available to assist parties at certain junctures in the arbitration, such as, the arbitrator selection phase and has administered proceedings upon request. Over the decades, CPR has continually added to its assisted arbitration services as disputes have become more complex, parties more adversarial and counsel more diverse. The natural culmination of the ongoing and increasing demand for CPR’s assistance is the release of the CPR Administered Arbitration Rules to better serve the users of arbitration.

A vast majority of arbitrations take place pursuant to the parties’ binding commitment in their business agreement to submit possible future disputes to arbitration in accordance with specified rules. Once a dispute has arisen, it is usually much more difficult for the parties to agree on any alternative to litigation. CPR recommends the inclusion of a dispute resolution clause in most business agreements. Parties should also consider whether to provide for administered or non-administered arbitration.

Salient Features of the Administered Rules
The CPR Administered Rules differ in numerous respects from other organizations’ administered arbitration rules, particularly as outlined below:

• The administered portions of the arbitration are only for those areas where parties need assistance from an administering organization and no more. The Rules themselves are built upon CPR’s experience with ad hoc/self-administered arbitration and incorporate CPR knowledge about where and how parties, counsel and arbitrators need assistance during the process.
• Experienced attorneys on CPR staff will be involved in the “administrative” tasks.
• The Rules require the expeditious conduct of the proceeding, empowering the arbitrator(s) to establish time limits for each phase of the proceeding (Rule 9.2), and to penalize a party engaging in dilatory tactics (see Rule 19.2).
• All arbitrators, including those appointed by either party, are required to be independent and impartial (Rule 7.1). Such a requirement enhances the integrity of the arbitration process. Rule 5.4 offers parties, as an option, a “screened” procedure for selecting party-appointed arbitrators without the arbitrators knowing which party appointed them, thereby even further enhancing the integrity of the process .
• The parties are given ample opportunity to select a sole arbitrator or a panel of three arbitrators with CPR’s role limited to querying candidates for their availability and requesting disclosures about circumstances that might give rise to justificable doubt regarding the candidate’s independence or impartiality. If parties do not want to jointly select arbitrators, or cannot do so, either party may request CPR’s assistance (Rule 6.1). CPR will jointly convene the parties by telephone to discuss the selection and thereafter provide lists of candidates from the CPR Panels for ranking (Rule 6.2).
• The Tribunal may decide challenges to its jurisdiction (Rule 8). This should allow arbitrators to decide all issues, including arbitrability questions, without the necessity for court intervention.
• The chair of the Tribunal is assigned responsibility for the organization of conferences and hearings and arrangements with respect to the functioning of the Tribunal (Rule 9.1).
• The Tribunal is required to hold at least one pre-hearing conference to plan and schedule the proceeding (Rule 9.3). The chair shall keep CPR informed of such arrangements throughout the proceedings. The pre-hearing conference should result in the smooth scheduling of the case, and may aid possible settlement. The Tribunal is required to apply the substantive law chosen by the parties to govern the merits of their dispute (Rule 10.1).
• The Tribunal is also specifically empowered to grant any remedy, including specific performance and injunctive relief, within the scope of the parties’ agreement and permissible under applicable law (Rule 10.3).
• The Tribunal is given great leeway in matters of procedure. The Tribunal is specifically empowered, for instance, to:

  establish time limits for each phase of the proceeding (Rule 9.2); limit the time allotted to each party for presentation of its case (Rule 9.2); make pre-hearing orders (Rule 9.4); require such discovery as it deems appropriate (Rule 11); require the submission of pre-hearing memoranda (Rules 9.4 and 12.1); require evidence to be presented in written or oral form (Rule 12.2).

• The Tribunal is empowered to appoint neutral experts (Rule 12.3).
• The Tribunal may take interim measures as it deems necessary, including for the preservation of assets (Rule 13.1).
• Unless the parties agree otherwise, the Rules set forth a procedure for applications for interim relief to a Special Arbitrator appointed prior to the constitution of the Arbitral Tribunal (Rule 14).
• The Tribunal is required to state the reasoning on which its award rests unless the parties agree otherwise (Rule 15.2). CPR believes the parties are entitled to know how the decision was reached. The requirement that the award be reasoned also discourages any tendency for arbitrators to “split-the-baby” without a principled basis for doing so.
• Each arbitrator is to be fully compensated on a reasonable basis determined at the time of appointment for serving as an arbitrator (Rule 17.1).
• The Tribunal is empowered to apportion costs, including attorneys’ fees and other costs incurred by the parties, between the parties, taking into account the circumstances of the case, the conduct of the parties during the proceeding and the result (Rule 19.2).
• The proceedings are confidential, with limited exceptions (Rule 21).
• The Tribunal may suggest at any time that the parties explore settlement (Rule 21.1).
• The Tribunal may arrange for mediation of the dispute at any time with the consent of the parties (Rule 21.2).
• The Rules are intended primarily for disputes between responsible parties who will not attempt to obstruct the process. However, the Rules do permit the process to go forward even if a Respondent fails to deliver a notice of defense, fails to participate in selection of the Tribunal, or ultimately fails to appear at a hearing. (See Rules 3, 6 and 16).

COMMENTARY ON STANDARD CONTRACTUAL PROVISIONS

CPR recommends that in most instances, business agreements include a multi-step ADR scheme with three sequential stages of dispute resolution:

(i) a Negotiation Phase between executives with decision-making authority who are at a higher level than the personnel involved in the dispute; (ii) a Mediation Phase to facilitate settlement by employing a skilled neutral, not to impose a solution, but to assist the parties in reaching agreement; and (iii) a Final Binding Arbitration Phase in case the non-binding phases produce no settlement, or, Litigation if the non-binding phases produce no settlement and private binding arbitration is not selected. See CPR’s website for sample clauses (www.cpradr.org).

The suggested standard pre-dispute clause and submission agreement which precede the Rules may be modified or supplemented. It is desirable that the parties specify the number of arbitrators and the place of arbitration. The governing law should also be specified, preferably in a separate section. If a governing law is specified, it may be advisable to state whether or not the conflict of laws rules of that law are included. Drafters may also wish to consult the CPR Protocol on Disclosure of Documents and Presentations of Witnesses in Commercial Arbitration.

The pre-dispute clause and the submission agreement call for an election as to whether the Tribunal will be composed of:

• Sole Arbitrator
  
  • Option One: Sole arbitrator jointly designated by the parties. If the parties are unable to agree, CPR makes the appointment using a list process with parties’ participation.
  • Option Two: Sole arbitrator selected by CPR using a list process with the parties’ participation.

• Three Arbitrators
  
  • Option One: Each party designates one arbitrator and the two appointed arbitrators designate the Chair. If parties are unable to agree on a Chair, CPR makes the appointment using a list process with the parties’ participation.
  • Option Two: Each party designates one arbitrator and the Chair is appointed by CPR using a list process with the parties’ participation (also Default Rule).
  • Option Three: Each party designates an arbitrator, however, arbitrator does not know which party selected them – the screened procedure. Chair appointed by CPR using a list process with parties’ participation.
  • Option Four: All three arbitrators jointly selected by the parties. If parties are unable to agree, CPR makes the appointment using a list process with the parties’ participation.
  • Option Five: All three arbitrators selected by CPR using a list process with the parties’ participation.

Such an election made in a pre-dispute clause may be changed by further agreement once a specific dispute has arisen. If the parties fail to make an election, the party-appointed model where each party appoints an arbitrator and the Chair is appointed by CPR using a list process with the parties’ participation is the default rule. (Rules 5 and 6 govern the selection of arbitrators.) The parties may also elect, through the pre-dispute clause, to opt out of the Special Arbitrator procedure established by Rule 14. If the parties do not expressly opt out of that procedure, it shall be deemed part of any arbitration clause or agreement entered on or after November 1, 2007, where parties agree to arbitrate under the CPR Rules.

Pursuant to Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468, 109 S. Ct. 1248 (1989) and its progeny, CPR has inserted language in the standard pre-dispute clause and submission agreement to the effect that the arbitration shall be governed by the Federal Arbitration Act. If parties choose to use a different law, or in the rare event that the federal law does not apply (where, for example, the underlying transaction is not “in commerce”), another law should be specified. It is essential for the parties to stipulate that judgment may be entered upon the award, in order to comply with the requirement of the Federal Arbitration Act, 9 U.S.C. §9.

The U.S. Supreme Court in Mastrobuono v. Shearson Lehman Hutton, Inc., 512 U.S. 52, 115 S. Ct. 1212 (1995), held that, unless the parties expressly agree otherwise, arbitrators are authorized to award punitive damages. If the parties wish to preclude the arbitrators from awarding punitive damages, they must include a provision to that effect in the pre-dispute clause or the submission agreement. A suggested provision to that effect is:

“The arbitrator(s) are not empowered to award damages in excess of compensatory damages and each party expressly waives and foregoes any right to punitive, exemplary or similar damages unless a statute requires that compensatory damages be increased in a specified manner.”

Appeals – Parties wishing to authorize an appeal to the CPR Arbitration Appeal Tribunal under the CPR Arbitration Appeal Procedure should include the following language in their arbitration clauses or post-dispute arbitration agreement:

“An appeal may be taken under the CPR Arbitration Appeal Procedure from any final award of an arbitral panel in any arbitration arising out of or related to this agreement that is conducted in accordance with the requirements of such Procedure. Unless otherwise agreed by the parties and the appeal tribunal, the appeal shall be conducted at the place of the original arbitration.”

COMMENTARY ON INDIVIDUAL RULES

A. General and Introductory Administered Rules

Rule 3. Commencement of Arbitration
Rule 3 sets forth the procedure to be followed when a proceeding is commenced pursuant to a pre-dispute arbitration clause. Rules 3.1 – 3.4 provide the particulars of how an arbitration is commenced. Rule 2 governs how notices are to be made, and authorizes service of notices and other communications by registered mail, courier, telex, facsimile transmission, email or any other means of telecommunication that provides a record thereof.

Under Rule 3.6, the arbitration will proceed even if the Respondent should fail to file a timely notice of defense. If the pre-dispute clause required each party to appoint an arbitrator, and either party fails to do so, the other party may request CPR to step in pursuant to Rule 6. Rule 3.10 governs the addition or amendment of claims after the notice of arbitration is filed; defenses, too, may ordinarily be freely added or amended, unless the Tribunal determines otherwise.

A submission agreement entered into after a dispute has arisen may include all or some of the material called for by Rules 3.2 and 3.7 and may eliminate the need for a notice of arbitration and a notice of defense. Rule 3.11 provides that “Rule 3 shall apply to the extent that it is not inconsistent with the submission agreement.” If the parties so desire, the submission agreement can provide that Rule 3 notices will not be required or will be modified.

Rule 4. Representation
It is assumed that parties normally would be represented by a law firm or an individual attorney; however, the Rules permit parties to be represented or assisted by any persons of their choice.

Under the laws of certain jurisdictions, representation of a party in an arbitration proceeding may constitute the practice of law, in which case representation by an attorney would be required. If the parties are represented by legal counsel, such counsel need not be a member of the local bar at the seat of the arbitration unless local law or regulation at the seat of the arbitration so requires.

B. Rules with Respect to the Tribunal

Rule 5. Selection of the Arbitrators by the Parties
Most practitioners, when confronted with a large or complex dispute, have greater confidence in a panel of three arbitrators than in a single arbitrator. Moreover, they usually prefer to permit each party to appoint an arbitrator. Rule 5.1 provides, therefore, that the Tribunal shall consist of two arbitrators appointed by the parties and a third arbitrator who shall chair the Tribunal, unless the parties have agreed on a Tribunal consisting of a sole arbitrator or three arbitrators not appointed by the parties.

Rule 5.4 presents a unique “screened” procedure for constituting a three-member Tribunal, two of whom are designated by the parties without knowing which party designated each of them. The procedure is intended to offer the benefits, while avoiding some of the drawbacks, of having party-appointed arbitrators. On the one hand, parties are able to designate arbitrators whom they consider to be well-qualified to sit on the Tribunal. On the other hand, any tendency (subtle or otherwise) of party-appointed arbitrators to favor or advocate the position of the parties who appointed them is avoided because those arbitrators are approached and appointed by CPR rather than the parties and are not told which party designated each of them. The Rules governing ex parte communications (Rule 7.4), challenges (Rule 7.6), and resignations (Rule 7.9) contain specific provisions designed to preserve the “screen” for the party-designated arbitrators under Rule 5.4 throughout the arbitration. The parties may choose the “screened” selection procedure in their pre-dispute arbitration clause (see standard pre-dispute clause), or agree to the screened procedure once a dispute arises.

CPR recognizes that, as a practical matter, some party-designated arbitrators selected pursuant to Rule 5.4 may deduce or learn which parties designated them – i.e., the “screen” may not, in all instances, be perfect. CPR nevertheless believes that the screened procedure is worthy of consideration by parties as a means to enhance the integrity of arbitrations involving party-appointed arbitrators. Any party-designated arbitrator who does, in fact, learn which party appointed him or her should disclose that fact to each of the parties and the other members of the Tribunal in order to ensure a level playing field. In the event an arbitrator discovers who appointed him or her, such knowledge would not be a basis for disqualification or challenge per se, and the arbitration can continue uninterrupted on a non-“screened” basis.

For many parties, the ability to select a Tribunal well qualified to hear and decide their dispute is a primary motivation to opt for arbitration. The selection of highly qualified, experienced arbitrators is critical. CPR believes that at least the chair of the Tribunal usually should be a respected attorney experienced in arbitration.

The arbitrators should be persons able and willing to control the course of the proceeding and to make definitive rulings on substantive and procedural matters.

Sophisticated counsel representing the parties are likely to know of individuals, especially of attorneys, who are well qualified and who meet the “independent and impartial” standard of Rule 7.1. CPR has established panels of leading members of the bar, including former judges, who are highly qualified to serve as arbitrators, in its CPR Panels of Distinguished Neutrals (“CPR Panels”). CPR’s lists of panelists are available to members on the CPR website (www.cpradr.org) or upon request from CPR, and panel members may be contacted directly.

Unless parties otherwise agree, Rule 5.1 requires that any arbitrator, not appointed by a party, shall be a member of the CPR Panels.

It should be noted that scheduling hearings on dates on which all three arbitrators are available frequently presents considerable difficulties and may well result in delays. Moreover, the need to have two or three arbitrators agree on the text of an award may also cause delay and additional expense. Consequently, a proceeding conducted by a sole arbitrator may be more expeditious and less expensive.

Tribunals of two arbitrators have been used on occasion, typically in complex technological disputes in which the objective was to structure a modus vivendi rather than only to arrive at conclusions as to liability and damages. The Rules may be modified to provide for a two-arbitrator Tribunal.

Rule 5.5 deals with the constitution of three member Tribunals in the multi-party context. It provides that, if there is more than one Claimant or one Respondent, and the parties’ arbitration clause contemplates each party appointing an arbitrator, then the multiple Claimants or multiple Respondents can jointly appoint an arbitrator. If they are unable or unwilling to do so, CPR shall appoint all of the arbitrators following the procedures of Rule 6.2.

Rule 6. Selection of the Arbitrator(s) by CPR
If the parties’ selection process fails, either party may request CPR’s assistance at the time and in the manner specified in Rule 6.

In accordance with Rule 6.2(a), CPR will convene the parties and discuss the selection of arbitrators. Thereafter, CPR will submit a list of candidates to the parties in writing. The parties are required to rank the nominees in order of preference. The nominee(s) willing to serve for whom the parties collectively have indicated the highest preference will be selected. Where a party has failed to appoint its party-appointed arbitrator, CPR shall appoint a person whom it deems qualified (Rule 6.3).

The parties will be encouraged to inform CPR of the qualifications they seek in an arbitrator. Individuals nominated by CPR will be members of CPR’s Panels, absent a special reason to go beyond the CPR Panels compelled by the particular circumstances of the arbitration.

Rule 7. Qualifications, Challenges and Replacement of Arbitrators
The degree of independence expected of a party-appointed arbitrator in the United States is not always clear. Parties may expect the arbitrator they appoint to act as their advocate on the Tribunal. CPR does not favor this approach. CPR believes that the advocacy role should be performed exclusively by each party’s counsel or other representative, and that permitting arbitrators to play such a role is prejudicial to the disinterested and candid deliberations in which the Tribunal should engage. Consequently, Rule 7.1 states: “Each arbitrator shall be independent and impartial.”

The rationale for party appointment is to enable each party to select an individual it considers well qualified. A party may not have ex parte communications relating to the case (other than of a purely ministerial nature) with any arbitrator or arbitrator candidate, except that a party may discuss the case in general terms with an individual before appointment to determine his or her suitability and availability to serve as arbitrator, and may confer with its appointee regarding the selection of the chair of the Tribunal (Rule 7.4). No ex parte communications whatsoever are allowed with arbitrators or arbitrator candidates who have been or may be designated pursuant to the screened selection procedure of Rule 5.4.

Rule 7.2 recognizes that other time commitments of arbitrators may well delay the proceeding, particularly if the Tribunal consists of more than one arbitrator. The Rule provides that by accepting appointment each arbitrator is deemed to represent that he or she has the time available to devote to the expeditious process contemplated by the Rules.

Rules 7.3 and 7.5 - 7.8 set forth a formal procedure for disclosure of “circumstances that might give rise to justifiable doubt regarding the arbitrator’s independence or impartiality,” and for a challenge for “justifiable doubt,” after the Tribunal has been constituted. It is anticipated that normally an individual’s possible conflicts of interest would be disclosed and resolved before selection, and that it would rarely become necessary to invoke the formal procedure.

In general, CPR believes all arbitrators should be held to high ethical standards and urges arbitrators to consult any potentially applicable ethical rules at the place of arbitration or elsewhere, as well as appropriate codes and guidelines. In that connection, CPR endorses the Code of Ethics for Arbitrators in Commercial Disputes (AAA/ABA 2004) to the extent not inconsistent with the CPR Rules.

If an arbitrator is formally challenged by a party, Rule 7.8 provides that CPR will decide the challenge in accordance with the CPR Challenge Protocol (excluding its fee requirement) after providing the challenged arbitrator, the other members of the Tribunal and the non-challenging party with an opportunity to comment on the challenge. The CPR Challenge Protocol provides that challenges are decided by a designated Challenge Officer within CPR or, where appropriate in light of the difficulty, complexity or other relevant factors, by a Challenge Review Committee consisting of three members drawn from a CPR Challenge Review Board of CPR Panelists. For further information on the CPR Challenge Protocol, see www.cpradr.org.

Decisions on challenges will be made and communicated to the parties and Tribunal expeditiously. The basis and reasons underlying the decision, however, are not communicated to the parties or the Tribunal, consistent with the confidential and administrative nature of the decision and the desire to avoid or minimize interlocutory proceedings in the courts.

Rules 7.9 - 7.11 provide for the event that an arbitrator must be replaced due to a successful challenge, resignation, failure to act, or death. In that event, a substitute arbitrator is selected pursuant to the procedure by which the arbitrator being replaced was selected. In recognition of the (usually slight) risk that party-appointed arbitrators might resign to delay the proceedings, the Rules are designed to minimize the impact of such tactics. Rule 7.9 allows the party that appointed the resigning arbitrator only 20 days to appoint a replacement, after which CPR is empowered to make the appointment. Moreover, under Rule 7.11, the remaining majority of the Tribunal have discretion not to repeat any previously held hearings once the substitute arbitrator is appointed.

Rule 7.12 provides that two arbitrators of a three member Tribunal have the power to continue arbitral proceedings and issue an award, notwithstanding any failure by the third arbitrator to participate, if the two arbitrators deem it appropriate to do so. This rule is designed to ensure the efficient conduct of the proceedings and protect the enforceability of an award rendered by two arbitrators from any later challenges.

Rule 8. Challenges to the Jurisdiction of the Tribunal
This Rule expresses the generally accepted principle that arbitrator(s) have the competence initially to determine their own jurisdiction, both over the subject matter of the dispute and over the parties to the arbitration. Accordingly, any objections to the existence, scope or validity of the arbitration agreement, or the arbitrability of the subject matter of the dispute, are decided, at least in the first instance, by the Tribunal consistent with the U.S. Supreme Court’s decision in First Options of Chicago v. Kaplan, 514 U.S. 938, 115 S. Ct. 1920 (1995).

The arbitrator(s) will decide whether the arbitration proceeds in the face of a jurisdictional challenge.

C. Rules with Respect to the Conduct of the Arbitral Proceedings

Rule 9. General Provisions
Under Rule 9.1, the Tribunal may conduct the arbitration as it deems appropriate, taking into consideration any mandatory provisions of applicable arbitration law (Rule 1.2). Such mandatory provisions could include, for example, provisions of arbitration law at the seat of arbitration requiring arbitrators and/or witnesses to take oaths.

Rule 9.1 further provides that the chair is “responsible for the organization of the arbitral conferences and hearings and arrangements with respect to the functioning of the Tribunal.” The efficiency of the proceeding will depend in large part on the chair’s taking the lead in asserting the Tribunal’s control over critical aspects of the procedure, including the setting of time limits as authorized by Rule 9.2. The Chair is to keep CPR informed of developments. The Tribunal is encouraged to consult CPR Guidelines for Arbitrators Conducting Complex Arbitrations at Arbitration-Award-Slimjim-for-download.pdf.

The Rules give the Tribunal wide latitude as to the manner in which the proceeding will be conducted. It is expected that the procedure will be determined in large part during the pre-hearing conference(s) held pursuant to Rule 9.3 and that following the conference(s) the Tribunal will issue a schedule or the conduct of the arbitration. The pre-hearing conference prescribed by Rule 9.3 should ordinarily be held in person in order to maximize the benefits of the conference, but may also be held by telephone or other form of electronic or teleconference where considerations of efficiency so dictate.

Narrowing issues to those central to the controversy, fact stipulations and admissions should be strongly encouraged by the Tribunal in the interest of focusing on core issues and simplifying the proceeding.

Some controversies hinge on one or two key issues of law which in litigation may be decided early by motion for partial summary judgment. At the pre-hearing conference, the desirability of the Tribunal’s ruling on such issues before the hearings commence can be considered. For guidance, counsel and the Tribunal should consult CPR Guidelines on Early Disposition of Issues in Arbitration CPR-Guidelines-on-Early-Disposition-of-Issues-in-Arbitration.

Other controversies hinge on a key issue of a technical nature on which a neutral expert can be helpful in bringing about a resolution. The appointment by the Tribunal of such an expert is authorized by Rule 12.3, although this should be used only sparingly, and can be discussed at the pre-hearing conference.

In the appropriate case, the Tribunal may bifurcate the proceeding. If the proceeding is bifurcated to first decide the issue of liability, the parties then may well be able to agree on the remedy. In arbitration, often parties have options not available to a judge or to arbitrators.

During the arbitrator selection process set forth in Rule 6, it may be necessary for CPR to query the parties preliminarily on certain matters that will be formally addressed at the Rule 9.3 conference and by the Tribunal under Rule 9.

A pre-hearing conference may well give the arbitrators an opportunity to suggest settlement discussions or mediation, as contemplated by Rule 21. Simply bringing the attorneys together for purposes of a conference may lead to such discussions.

Rule 10. Applicable Law(s) and Remedies

Under Rule 10, unless the parties shall have agreed in their contract or otherwise as to which law shall govern, the Tribunal is free to apply the law(s) or rules of law as it determines to be appropriate to govern the dispute. Rule 10.3 makes clear that the Tribunal can grant any remedy or relief available under the contract and applicable law, including equitable relief such as specific performance and injunctive relief. Indeed, arbitrators have been held to have even greater latitude than courts in fashioning appropriate equitable relief. Arbitrators may not simply do as they please, however; any remedy or relief granted must be permissible under the contract and applicable law, and Rule 15.2 requires arbitrators to explain the reasoning on which their awards rest.

Punitive Damages – The U.S. Supreme Court in Mastrobuono v. Shearson Lehman Hutton, Inc., 512 U.S. 52, 115 S. Ct. 1212 (1995), held that, unless the parties expressly agree otherwise, arbitrators are authorized to award punitive damages.

If the parties wish to preclude the arbitrators from awarding punitive damages, it would be advisable to include a provision to that effect in the pre-dispute clause or the submission agreement. A suggested provision to that effect is:

“The arbitrator(s) are not empowered to award damages in excess of compensatory damages and each party expressly waives and foregoes any right to punitive, exemplary or similar damages unless a statute requires that compensatory damages be increased in a specified manner.”

The Tribunal and counsel should consult CPR Protocol on Damages in Arbitration at CPR-Protocol-on-Determination-of-Damages-in-Arbitration.

Rule 11. Discovery

Under Rule 11, the Tribunal “may require and facilitate such discovery as it shall determine is appropriate in the circumstances, taking into account the needs of the parties and the desirability of making discovery expeditious and cost-effective.”

Arbitration is not for the litigator who will “leave no stone unturned.” Unlimited discovery is incompatible with the goals of efficiency and economy. The Federal Rules of Civil Procedure are not applicable. Discovery should be limited to those items for which a party has a substantial, demonstrable need. Rule 12.2 provides for the application of the attorney-client privilege and the work product immunity. That protection is intended to apply to discovery as well as to hearings.

It is desirable for the parties’ counsel to agree, preferably before the initial pre-hearing conference, on a discovery plan and schedule and to submit the same to the Tribunal for its approval. Counsel should consult CPR’s Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration at CPR-Protocol-on-Disclosure-of-Documents-and-Presentation-of-Witnesses-in-Commercial-Arbitration.

A party may encounter difficulties if it needs to secure documents or testimony from an uncooperative third party. The arbitrators may well be of assistance in such a situation through the exercise of their subpoena power or in other ways. If the third party’s location is beyond subpoena range, holding a hearing at that location may be an option. Applicable law should be reviewed to assess whether arbitrators also have the power to issue enforceable subpoenas to third parties to obtain prehearing discovery.

Rule 12. Evidence and Hearings

The Rules do not establish a detailed mandatory hearing procedure but permit the Tribunal to determine the procedure. At least the main features should be established during the pre-hearing conference(s). The Tribunal need not apply rules of evidence used in judicial proceedings, except that the Tribunal is required to apply the attorney-client privilege and the work product immunity when it determines that the same are applicable (Rule 12.2).

Self-authentication of documentary exhibits, the authenticity of which are not disputed, is a widely used practice which reduces hearing time. In cases in which voluminous testimony is expected, the hearings will be expedited considerably if the Tribunal requires the direct testimony of all or most witnesses to be submitted in written form before the witness is to appear. This procedure also enables opposing counsel to better prepare for cross-examination. Affidavits would be admissible in evidence unless the Tribunal rules otherwise. The parties and Tribunal are encouraged to consult CPR’s Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration at CPR-Protocol-on-Disclosure-of-Documents-and-Presentation-of-Witnesses-in-Commercial-Arbitration.

The Tribunal should consider at the pre-hearing conference the imposition of time limits on case presentation, as authorized by Rule 9.2. If necessary, any such limits can be extended. The Rules do not provide specifically for the notice the parties are to be given of hearing dates and times. It is assumed that the Tribunal will give notice in such form and with such lead time as is reasonable under the circumstances.

The efficiency of the proceeding will be enhanced substantially if hearings are held consecutively. If the Tribunal heeds every schedule conflict claim and adjournment request by either counsel, the hearings may drag on quite unnecessarily.

Rule 12.3 empowers the Tribunal to appoint neutral experts. CPR expects this power to be exercised sparingly, and only following consultation with the parties as to the need for a neutral expert, the scope of the assignment, and identification of well-qualified candidates. It is not intended that the expert give advice to the Tribunal ex parte; indeed, the Rule entitles the parties to cross-examine and to rebut the expert. The conflicting views of partisan experts can lead to confusion rather than enlightenment of arbitrators. In appropriate cases the arbitrators might encourage the parties early on, e.g., at the pre-hearing conference, to agree on the joint appointment of a neutral expert.

The Rules do not automatically require the submission of post-hearing briefs, but the Tribunal may order the submission of such briefs. Final oral argument may also be scheduled, either at the conclusion of the hearing or at a later date.

The Tribunal’s powers with respect to subpoenas are determined by applicable law and are not dealt with specifically in the Rules.

Rule 14. Interim Measures of Protection by a Special Arbitrator

Rule 14 establishes a procedure pursuant to which a special arbitrator may be appointed within a short time frame at the request of a party in order to adjudicate a claim for interim measures prior to the constitution of the Tribunal. This procedure is available where the parties have selected CPR’s Rules to govern their proceeding. As with any relief granted by the Tribunal, a remedy or relief granted by the special arbitrator must be permissible under the contract and applicable law.

Rule 14.12 provides that a request for interim relief by a party to a court shall not be deemed incompatible with the agreement to arbitrate. However, this provision is not intended to permit a party to seek relief in one forum if it is denied elsewhere.

Rule 15. The Award

Rule 15.2 provides: “All awards shall be in writing and shall state the reasoning on which the award rests unless the parties agree otherwise.” Most parties engaging in arbitration want to know the basis on which the arbitrator(s) reached their decision. CPR, moreover, considers it good discipline for arbitrators to require them to spell out their reasoning. Sometimes this process gives rise to second thoughts as to the soundness of the result. The Rule 15.2 mandate gives the arbitrator(s) greater leeway than would a requirement to state “conclusions of law and findings of fact.” Some parties hesitate to arbitrate out of a concern that arbitrators are prone to “split the baby”, i.e., to make compromise awards. Any tendency on the part of arbitrators to reach compromise awards should be restrained by the requirement of a reasoned award.

Certain administering organizations and practitioners favor “bare” awards without explanation of any sort, in the belief that such awards are the least likely to be challenged and overturned by a court. In CPR’s view, the risk that a reasoned award will be successfully challenged normally is small and outweighed by the other considerations mentioned above.

Where there are three arbitrators, a majority of the arbitrators must sign the award. Occasionally, a Tribunal of three arbitrators experiences great difficulty in developing a position to which a majority can subscribe. Certain other arbitration rules empower the chair of the Tribunal to make an award singly under such circumstances, notwithstanding the (usually slight) risk of a rogue chair ruling unreasonably. The parties are free to modify the Rules to grant such authority to the chair.

Unless the parties have agreed in their business agreement or otherwise which law shall govern, the Tribunal is free to determine the law which is to govern the award.

Rule 15.8(a) requires the parties and the arbitrators to use their best efforts to submit the dispute to the Tribunal for decision within six months of the initial pre-hearing conference, and for the Tribunal to submit the final award to CPR within 30 days after the close of the hearing. CPR shall conduct a prompt limited review of the award as provided under Rule 15.4 and thereafter render the award to the parties promptly.

The Rules do not deal expressly with confirmation of an award, as the matter is covered by the Federal Arbitration Act and its state counterparts. For most users of arbitration, the finality of the arbitration award is a significant advantage of arbitration over court litigation. But parties to major cases are occasionally concerned about the possibility of an aberrant award and would like the option of a private appeal to a tribunal of outstanding appellate arbitrators. In response to that concern, CPR has promulgated the CPR Arbitration Appeal Procedure, which is available on the CPR website (www.cpradr.org) or upon request from CPR.

Rule 16. Failure to Comply with Rules

Rule 16 empowers the Tribunal to impose a remedy it deems just whenever a party materially fails to comply with the Rules. The power to make an award on default is specifically provided, although such awards may only be made after the production of evidence and supporting legal argument by the non-defaulting party. Pursuant to Rule 19.2, the Tribunal also may take a party’s conduct during the proceeding into account in assessing costs.

D. Rules with Respect to Costs and Fees

CPR believes that highly qualified arbitrators are entitled to be fully compensated for their service as arbitrators. If an arbitrator is a member of a law firm, he or she is likely to expect compensation at approximately the hourly rates normally charged for his or her services. The rates payable to party-appointed arbitrators should be agreed to between the appointee and the appointing party (except where the screened procedure of Rule 5.4 is being used to designate party-appointed arbitrators, in which case the rates will be agreed to between the appointees and CPR). The rates of other arbitrators should be established by agreement with both parties. The members of a three-member Tribunal are likely to be compensated at different rates, but gross variations may present problems. In any event, the compensation for each of the arbitrators should be fully disclosed to all Tribunal members and parties.

Normally, the parties are expected to make advances for costs to a fund pursuant to Rule 17.2, and the arbitrators’ fees, as well as other expenses, would be paid from such fund. The Tribunal shall determine the necessary advances on arbitrator(s) fees and expenses and advise CPR which, unless otherwise agreed by the parties, shall invoice the parties in equal shares. The “costs of arbitration” enumerated in Rule 19.1 include the costs for legal representation and assistance and experts incurred by a party to such extent as the Tribunal may deem appropriate.

In accordance with Rule 19.2, unless the parties otherwise agreed, the Tribunal may apportion the costs of arbitration between the parties “in such manner as it deems reasonable taking into account the circumstances of the case, the conduct of the parties during the proceeding, and the result of the arbitration.” The arbitrator(s) may take into account tactics by either party that unreasonably interfered with the expeditious conduct of the proceeding.

CPR Administrative Fees are set forth in the Schedule of Administered Arbitration Costs available on the CPR website at www.cpradr.org and are payable as set out in Rule 18. The parties are jointly and severally liable to CPR for such fees. CPR reserves the right to adjust such fee based on developments in the proceeding.

E. Miscellaneous Administered Rules

Unless the parties agree otherwise, the parties, the arbitrators and CPR must treat the proceedings, and any related discovery and the decision of the Tribunal, as confidential, except in connection with judicial proceedings ancillary to the arbitration. (Rule 20) A high percentage of civil lawsuits and business arbitration proceedings are disposed of before a trial or hearing takes place, most by settlement. Yet often each party is reluctant to propose settlement negotiations, if only out of concern that the proposal will be seen as a sign of weakness. A suggestion to explore settlement by the Tribunal at one or more appropriate junctures in the proceeding should launch such negotiations without either party’s bearing the onus of being the proposer. (Rule 21)

A skilled mediator can play a critical role in bringing about agreement between adversaries, even where unaided negotiations did not result in agreement. If the Tribunal believes that mediation may result in a settlement, the Tribunal may suggest that the parties engage in such a process and, if the parties agree, assist in arranging the same. The parties should consider suspending the arbitration proceedings while mediation is in progress, at least for a limited time.

It may well be desirable for senior executives to play an active role in a mediation proceeding. Often the parties have settlement options that are business-oriented and more creative than the payment of money. Business executives are likely to be best able to explore such options.

As a general rule, members of the Tribunal should not serve as mediator. The parties may hesitate to confide in an arbitrator serving as mediator and an arbitrator would be inhibited in making settlement proposals or giving advice to the parties. Moreover, an arbitrator serving as mediator may no longer be able to serve as an impartial arbitrator if the mediation fails to resolve the dispute. The Tribunal can nevertheless be helpful by proposing well qualified candidates to serve as a mediator.

If a settlement does not come about, the terms of any settlement offers should not be admitted into evidence at the hearings or otherwise disclosed to the Tribunal. If the parties enter into a settlement agreement, they may request that the Tribunal issue an award incorporating the settlement terms. If all of the parties make such a request and this request is accepted by the Tribunal, then the Tribunal may record the settlement in the form of an award. The Tribunal is not obliged to give reasons for such an award.

For information on how to file a matter with CPR, see File a Case | CPR International Institute for Conflict Prevention & Resolution (cpradr.org).