ADR CORNER
Arbitration as a Solution During and After the Pandemic
DARIA PUSTILNIK
While courts experience an unprecedented backlog of cases , and trials are largely on hold , agreeing to a binding arbitration can be an effective approach to dispute resolution for commercial cases . Before the pandemic , parties primarily considered whether arbitration would be cheaper and faster than litigation . In light of the pandemic , arbitration has emerged as a faster route to the final resolution of a commercial dispute .
In particular , because of trial restrictions , Florida is experiencing a significant buildup of cases . The Florida Trial Court Budget Commission reported that as of June 2020 , Florida courts had a backlog of 992,074 cases and 4,987 delayed trials . 1 By November 2020 , these numbers went up to 1,147,703 cases and 5,187 delayed trials . 2 Notably , approximately 84 % of delayed trials are criminal . On September 1 , 2020 , Chief Judge Krista Marx stated that upon resumption of trials , criminal cases will take priority . 3 It is estimated that it will take Florida courts several years to resolve the backlog of cases . Therefore , civil cases will be trapped in the court system , and a commercial contract dispute may not be set for trial for several years . At the same time , the pandemic has led to an increased number of disputes . Luckily , arbitration is an effective option for commercial cases that can provide significant benefits when compared to litigation . The benefits may include :
• Relative speed . o In light of the backlog of cases and limited availability of trials , arbitration will allow a case that does not settle to proceed to a final hearing and a resolution .
• Customizable procedures and relatively informal process . o Arbitration is highly customizable . The parties are free to adopt the rules of a forum , adopt modified rules , or create their own rules for an ad hoc process . Many institutions ’ rules make expedited procedures available for disputes that satisfy certain criteria , which could be advantageous . Routine hearings are usually conducted remotely , and final hearings may be conducted remotely , if necessary .
• Privacy . o Generally , arbitration is private . The need for privacy can be specified in the arbitration agreement and confidentiality is a feature of the rules of most , if not all , arbitration institutions .
• Expertise .
o Arbitration provides the parties an opportunity to select an arbitrator or a panel with experience in the industry or the particular area of the law that is relevant to the dispute . This may contribute to a speedy and efficient resolution .
• Technology . o The hearings in international and domestic arbitrations have often been conducted remotely even before the pandemic , and the tribunals are used to employing technology to advance cases .
• Cost . o Arbitration can be an effective costcutting tool . For example , generally in arbitration , the rules of evidence are relaxed , and there is less discovery and motion practice . The resulting cost savings often offset the arbitrator ’ s or the panel ’ s fees . Of course , the rules vary from forum to forum and , similarly to litigation , the cost will greatly depend on the parties ’ approach .
The process for jointly submitting to arbitration is simple : the parties must enter into an agreement to arbitrate and file a claim with the forum , such as the American Arbitration Association , JAMS , or International Centre for Dispute Resolution ( unless the parties decide to conduct an ad hoc arbitration without the assistance of a forum ). To realize the benefits of arbitration , the parties should carefully craft the arbitration agreement and may wish to consider the following aspects :
• Pre-arbitration mediation .
• Forum / institution or an ad hoc arbitration .
• Governing law .
• Adoption of the institution ’ s rules ( whether those in effect at the time the contract is signed or including any future amendments ) or modified rules . If a set of rules is adopted , the following often will be addressed , but the parties can provide for modifications .
• Single or multiple arbitrators .
• Appointment procedure for the tribunal .
• Requirements for specialized knowledge or expertise of the arbitrator ( s ).
• Rules for communications with the tribunal .
• Availability and procedure for : o Preliminary injunctions . o Discovery . o Dispositive motions . o Expedited resolution of disputes involving low amounts in controversy . o Default . o Withdrawal of claims . o Combining of the disputes .
• Time limit for the completion of arbitration .
• Entitlement to attorneys ’ fees and costs
PBCBA BAR BULLETIN 8 and fees for seeking fees .
• Availability of an appeal and appellate procedure .
All these issues have been subject to disputes in my practice . I find that the arbitration clauses the parties draft when structuring deals and well before any disputes arise often tend to be short and do not address many procedural aspects . Addressing these in the arbitration clause can result in significant cost savings during the arbitration .
In sum , arbitration can present significant advantages as well as be an effective tool for dispute resolution during and after the pandemic . Parties and their counsel should consider this option while the courts struggle to resolve the backlog of pending cases .
Daria Pustilnik is a lawyer with Kobre & Kim , a disputes and investigations firm with offices worldwide . Daria has represented clients in their domestic and cross-border complex commercial disputes in state and federal courts ; under the rules of the American Health Lawyers Association , American Arbitration Association , International Centre for Dispute Resolution , and the London Court of International Arbitration ; and in arbitrationrelated litigation , such as cases pursuant to 28 USC § 1782 . Daria is experienced in handling matters involving simultaneous arbitration , bankruptcy , civil and agency proceedings in multiple jurisdictions , such as the US , UK , BVI and Russian Federation . Before joining Kobre & Kim , she practiced at Shutts & Bowen LLP , and served as a law clerk for Judges Kenneth A . Marra and James M . Hopkins in the Southern District of Florida . Daria can be reached at daria . pustilnik @ kobrekim . com or 347-899-0423 .
For additional ADR tips and resources go to https :// www . palmbeachbar . org / alternativedispute-resolution-committee /
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Trial Court Budget Commission Jan . 22 , 2021 Meeting Agenda , Agenda Item V .: 2021 Legislative Session Update , Pandemic Generated Workload Statewide Estimates ( available at https :// www . flcourts . org / content / download / 714796 / file / TCBC % 20 Meeting % 20Packet % 201-22-2021 . pdf ) ( accessed on March 14 , 2021 ).
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3
Chief Judge Krista Marx discusses backlog in Palm Beach County courts ( Sept . 1 , 2020 ) ( available at https :// www . msn . com / en-us / news / crime / chief-judge-krista-marx-discussesbacklog-in-palm-beach-county-courts / vi-BB18zHdr ( accessed on March 14 , 2021 ).