The AAA Revamps Its Arbitration and Mediation Rules

The American Arbitration Association’s (“AAA”) Commercial Rules and Mediation Procedures (the “Rules”) are frequently deployed in complex business contracts as a mean to resolve business disputes.

The AAA occasionally amends the Rules to bolster their effectiveness and to improve the chances of the parties resolving their disputes through alternative dispute resolution.

The Rules apply anytime they are specifically referenced in a contract or even when the parties simply agreed to arbitration by the AAA of a domestic commercial dispute without specifying a particular version of the rules.

Given the most recent version of the Rules apply unless an earlier version is specifically referenced, any changes to the Rules can impact the resolution of commercial business disputes (including breach of contract) for contracts executed before and after the Rules became effective.

There is significant interest anytime the Rules are amended both in the arbitration and mediation communities as well as from corporate lawyers who regularly draft contracts.  The AAA’s recent amendment to the Rules effective September 1, 2022 is no different.

The following is the AAA’s summary (in its own words) of its recent changes to the Rules which focus on process improvements to several key areas, including consolidation and joinder, use of technology, and greater security and privacy:

“New Rules

• Consolidation: AAA’s first-ever commercial rule for the consolidation of existing arbitrations or the joinder of additional parties
  
  
• Confidentiality: Captures the long-standing requirements of the Code of Ethics for Arbitrators by including a commitment to the confidentiality of arbitration in the Rules
  
  
• Conduct of parties and their representatives: Specifically incorporates into the Rules the AAA’s expectations of civility and professionalism of all participants in arbitrations
  
  
• Providing arbitrators with the authority to interpret awards: Draws upon the recently adopted (International Centre for Dispute Resolution (ICDR) article that allows the arbitrator to explain the award on a party’s motion
  
  
• The importance of cybersecurity, privacy, and data protection: Reflects the weight that the AAA places on cybersecurity and recommends that data protection be discussed in the preliminary hearing

“Additional significant amendments to the arbitration rules include:

• Expanding arbitral authority to determine the method of proceedings
  (Building on lessons learned from the COVID-19 pandemic, certain Rules now give the arbitrator the express authority to compel the use of video or electronic means for some or all of the hearing.)
  
  
• Adjusting the dollar thresholds for application of the Expedited Procedures and Large, Complex Commercial Disputes Procedures
  
  
• Strengthening limitations on motion practice and discovery in the Expedited Procedures
  
  
• Updating the rule on stenographic records to include a broader definition of transcription
  
  
• Increasing the dollar threshold for a three-arbitrator panel”

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Click here for the AAA’s detailed explanation of its recent changes to the Rules.

A full set of the AAA Commercial Arbitration Rules and Mediation Procedures, amended and effective September 1, 2022 are available here.

Conclusion

If you have questions about these recent changes or whether to include an arbitration or mediation clause in your business contract for your New York or New Jersey business, be sure to contact a business attorney for a consultation.

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