The art of arbitrator selection

The most important decision a party can make in domestic or international commercial arbitration is the choice of arbitrator - whether it be a sole arbitrator or, on a three-arbitrator panel, one's party-appointed arbitrator and the chair of the tribunal. Too many parties spend scant time contemplating the selection or, worse, leave this decision to chance. Here are some suggestions to keep front of mind. 

1. Arbitration agreement

The starting place is the arbitration agreement. During my years as an advocate, I advised clients to imagine their deal breaks down several years after closing. Who is more likely to be the aggressor, they or their business partner? Will this be a dispute between two sophisticated companies of comparable size, or a dispute between a large company and a smaller supplier or between a franchisor and franchisee? Will the dispute concern an R&D project involving the transfer or exchange of confidential information, and which party will be more threatened by the potential loss of confidentiality? 

Depending on the answers to such questions, the client should then ponder whether they or their adversary will have the greater need for disclosures (discovery)? For example, if a biotech client licenses a major drug patent to a pharmaceutical for development and manufacture, will the client need robust disclosures to prove that the pharmaceutical failed to take reasonable efforts to commercialize the drug? Will the client or the adversary have more need for potentially dispositive pre-trial motions as in a U.S. court case or, instead, desire to defer motions to the merits hearing (trial)? 

Your answers to such questions may influence how you describe in the arbitration agreement the characteristics of the desired arbitrator and special arbitration procedures. 

2. Sources of information

How do you obtain reliable information about potential arbitrators? The arbitral institution should have a copy of the arbitrator candidate's professional summary. The arbitrator may maintain an independent website, which you should carefully scrutinize for clues about prior rulings and procedural preferences. And increasingly, you can use artificial intelligence tools to crawl the internet in search of decisions or articles written by or about the arbitrator. 

Major law firms sometimes collect intelligence on arbitrators, with comments by the firm's lawyers who have appeared before the arbitrator regarding temperament, openness to new ideas, ability to work with other arbitrators, familiarity with evidentiary issues, leadership qualities, etc. Finally, some will find it helpful to briefly interview candidates for party-appointed arbitrator about availability and experience, while avoiding discussion of the issues. 

3. Substantive experience

One reason arbitration is touted as superior to court litigation is your ability to specify the arbitrator's subject matter expertise. The caveat, however, is to avoid being so specific that you unduly narrow the universe of potential arbitrators. Likewise, subject matter expertise must be balanced against all other criteria; sometimes a candidate with spot-on subject matter expertise lacks experience handling evidentiary issues or has an off-putting personality.   

Finally, you must assess the arbitrator's experience handling disputes of comparable magnitude as measured by the value of claims and counterclaims. Disputes worth more than $100 million present technical, factual and legal questions considerably more complex than disputes of $500,000 to $1 million.

4. Procedural experience

Domestic arbitration can be similar to traditional U.S. litigation, but the two processes diverge when it comes to procedural flexibility. This divergence is stark when comparing international arbitration with U.S. court litigation.
U.S. courts are governed by extensive civil procedure and evidentiary rules, with case law interpreting and applying these rules. By contrast, the procedural rules of an arbitral institution are purposefully bare-boned and, strikingly, the rules of evidence do not apply. Arbitrators and the parties thus have flexibility to design a process that fits the dispute. You should select an arbitrator with sufficient real-world experience to discern when motions, disputed disclosures, or additional testimony will make a difference.

You should assess if the arbitrator can manage strong personalities, including controlling parties' demands to file or to resist marginal dispositive or discovery motions. Such issues are relatively easy when the parties are aligned, but are more difficult when the parties have different views.   

In international arbitrations, parties from civil law countries come to arbitration with very different expectations, looking to avoid "American" style arbitration. Civil law counsel may want the arbitration to play out on the papers to the extent possible, minimizing live witness examination, pushing motions off to the merits hearing, and limiting disclosures. It is best to select an arbitrator who has encountered and understands the different approaches.

5. Open mindset

It is of utmost importance that the sole arbitrator or, in the case of a three-arbitrator panel, the chair, be entirely fair and impartial and does not favor one party over the other. Inevitably, there will be a victor and a loser. The ideal arbitrator must listen even-handedly to the evidence and legal arguments. You never want lingering suspicions that the arbitrator, for unspoken reasons, favored the other side or harbored philosophical biases that made it more difficult to see the validity of your arguments. 

In the case of a three-arbitrator panel, we typically had the right to select our party-appointed arbitrator. That "wing" played an important role because in the give and take before the merits hearing and during deliberations over the final award, the wing appropriately can make sure your evidence and arguments are understood by the tribunal, while remaining independent in their final decision. As an advocate, I believed that the best wing arbitrator was the "straight shooter" whose words would be respected by the chair and the other wing arbitrator. 

6. Cultural diversity

Diversity in arbitration takes on a different meaning than "diversity" in academia or in U.S. corporate life. In international arbitration, parties and their counsel hail from different countries. The lawyers may have been schooled in different legal traditions, which places on the arbitrator the responsibility to "hear" all parties' arguments effectively. In a dispute between a U.S. corporation and an offshore company, there are socio-political differences to be taken into consideration so that all stakeholders feel they have been heard.

7. Availability

Some of the world's top arbitrators are so busy that they are booked for many months or even years. Some institutions, recognizing this issue, require the arbitrators, prior to selection, to specify dates when they are not available. You should ascertain that the arbitrator you desire can devote sufficient time to the dispute.