The goal of commercial arbitration is to bring final disposition to business disputes as an efficient and economical alternative to litigation. In an effort to improve efficiency, discovery is generally more limited than expected in litigation. Limited discovery can have a profound impact on summary disposition in arbitration.
Summary judgment in litigation allows cases to be resolved partially or entirely, after the opportunity for discovery, when no genuine issue of material fact exists and judgment is otherwise proper as a matter of law. See, e.g., Fed. R. Civ. P. 56. In contrast, commercial arbitration does not have hard and fast substantive standards for dispositive motions. Arbitration instead concentrates on procedural rules to reach a just and fair result.
Like many courts, summary disposition in arbitration requires a pre-motion request. Although the procedure varies in different forums and before different arbitrators, Rule 34 of the Commercial Rules of the American Arbitration Association describes the rules regarding summary disposition:
R-34. Dispositive Motions (a) The arbitrator may allow the filing of and make rulings upon a dispositive motion only if the arbitrator determines the moving part has shown that the motion is likely to succeed and to dispose of or narrow the issues in the case. (b) Consistent with the goal of achieving an efficient and economical resolution of the dispute, the arbitrator shall consider the time and cost associated with the briefing of a dispositive motion in deciding whether to allow any such motion. (c) Fees, expenses, and compensation associated with a motion or an application to make a motion may be assessed as provided for in Rule R-49(c).
Subpart b, pertaining to the “time and cost associated with the briefing of a dispositive Motion,” is the critical factor whether the motion will be permitted. In litigation, the analogous question is whether sufficient time exists to address summary judgment before a trial on the merits. Courts will not decide summary judgment motions unless discovery opportunities on the pertinent issues have been exhausted. Because of docket control, some courts may be reticent to entertain partial summary judgment because the remainder of the case still needs to be heard.
In contrast to litigation, a motion for summary disposition is more effective if brought earlier rather than later. At the pre-motion conference, the arbitrator will poll the parties on what discovery is required, whether the briefing will be extensive and how much the evidence will duplicate the evidence that otherwise must be introduced at the hearing on the merits of the case for the issues not subject to summary disposition. Only after answering these questions, can the arbitrators decide whether the time and cost of the motion would constitute a real savings. In contrast to litigation, even when summary judgment might be highly likely in a litigation context, the same motion in an arbitration context might not be allowed because disposition would be too late and too costly compared to an arbitration hearing.
Obtaining Permission to File the Motion
Because limited discovery can make the certainty of obtaining summary disposition more difficult, the request for the motion must be simple, cogent and as early in the case as possible. In a recent franchise case, respondent argued that claimants did not fall within the various statutes asserted and that three statutory grounds for enhanced damages could be eliminated through summary disposition. Permission to file the motion was denied as the merits of the case still needed to be heard on the common law issues. The Tribunal reasoned that the testimony required for the motion and at the hearing would overlap. The final reason for denying leave to file for summary disposition was that the briefing would invade the time normally allotted for pre-hearing briefing.
In a different franchise case, a request for permission to file summary disposition was denied on the issue whether a release was effective. The parties disagreed on what law applied. But even though any hearing on disputed factual issues was fairly limited, the arbitrator denied permission to file the motion because the motion would only partially resolve the case. In addition, the same testimony would be necessary to dispose of the remaining portions of the case in chief.
Real Life Experience
Cynical practitioners claim that arbitrators deny motions for summary disposition because in part they wish to sit for the entire case and avoid curtailing their fees by early disposition. Our experience is that arbitrators do not elevate self-interest over their professional reputation and interest in reaching the right decision.
There are cases where even meritorious motions for summary disposition are denied for lack of a fully developed record. For example, in an international arbitration enforcing a construction warranty claim, a motion for summary disposition was allowed as it could eliminate the testimony of four construction and damage experts on each side and perhaps resolve a $500 million claim that would take nearly a month for hearings. The motion was based on the warranty claim being filed too late and appeared meritorious. But the claimant raised enough issues and uncertainty to defeat the motion. Ultimately, the case was decided on the simple fact that the warranty claim was brought too late, the precise issue of the dispositive motion. The motion was not meritorious, but it set the table for the ultimate disposition. Their award of counsel fees recognized the merit of the motion, even though it was denied.
Whether the arbitration is domestic or international, arbitrators have preconceived notions of when summary disposition is appropriate. If you anticipate bringing such a motion, inquire with the potential arbitrators even before they are selected if they have any bias against summary disposition. Even after appointment, it is important to confirm any predisposition toward summary disposition as it will save time and money. If you know what the Tribunal wants for summary disposition, you have a better chance of success.