April 1, 2020 / 8:13 PM / 2 months ago

Arbitration in the time COVID-19: AAA’s GC says it’s ready for whatever comes

(Reuters) - On a typical day, American Arbitration Association arbitrators oversee thousands of live hearings in dozens of locations across the country. “Typical” ceased to describe AAA operations this month. On March 16, AAA announced that its New York headquarters would be closing. Over the next few days, the arbitration service shut down all of its 28 offices, including the 18 locations with hearing rooms. A smattering of live hearings continued in a few venues where they were allowed under state and local COVID-19 restrictions.

But as of the beginning of this week, according to AAA general counsel Eric Tuchmann, not a single hearing is taking place. All have been adjourned – including 353 proceedings that were supposed to take place in AAA offices between March 16 and April 30. Live hearings won’t resume at AAA’s offices until at least the end of May.

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That doesn’t mean that AAA arbitration is at a standstill, Tuchmann said. All case filings, from arbitration demands to payment of arbitration fees, can be made electronically. AAA and individual arbitrators are insisting that parties in adjourned cases set rehearing dates. And if the parties agree, Tuchmann said, AAA is set up to conduct hearings by video. So far, he said, the service’s video capability far outstrips demand for it. But next week could be a turning point, with at least one case - a major international dispute - set to be heard entirely by video.

“It’s really, we’re finding, not that difficult,” he said. Yes, he said, some lawyers will resist video hearings in which witnesses appear just by phone or laptop camera. Some arbitration contracts, moreover, mandate that hearings take place in particular cities, although Tuchmann said he doubts that anyone had a global pandemic in mind when venue clauses were being drafted.

But if the parties are game, he said, nothing in AAA’s rules prohibits video hearings. The two sides can conduct test runs and exchange documents using AAA’s tech. And from what Tuchmann has heard from arbitrators, especially retired judges and sole practitioners, they’re eager to get back to work. “I am hearing that there’s a real desire to reconnect,” said Tuchmann, who’s working from his home in the New Jersey suburbs. (It’s been nice, he said, to have dinner every night with his wife and daughters, one in college and the other in high school, but he misses going into the office and talking with his colleagues face to face.)

Tuchmann shied away from predicting that the economic fallout from COVID-19 will lead to an onslaught of new AAA cases, allowing only that “when you’ve got a lot of disruption in an economy, it does give rise to disputes.” AAA has actually seen an 8.6% dip in new demands for arbitration since COVID-19 struck the U.S., with most of the decline coming from fewer labor and employment demands. Tuchmann said that it also seems from anecdotal evidence that businesses are focused at the moment on more immediate concerns.

But contractual cases are sure to arise, especially because force majeure clauses are notoriously fact-specific. Tuchmann offered the example of a skyscraper builder who was expecting a load of steel from Asia but the shipment was delayed because workers weren’t available to load the cargo. “Who’s responsible for the disruption?” Tuchman said. “That’s the type of thing you might see.”

As you know, employers over the past decade have embraced mandatory arbitration for employment claims, so it seems inevitable that cases involving mass layoffs and novel questions about worker safety will ultimately wind up in arbitration. Tuchmann posited that alternative dispute resolution can be particularly useful in widescale disasters. After Superstorm Sandy, for instance, AAA ran a mediation program to resolve thousands of claims by New York property owners. The arbitration service also set up a system to handle thousands of foreclosure disputes after the 2008 recession, Tuchmann said.

Tuchmann said that he’s been encouraged by conversations with lawyers in Asia. AAA set up a Singapore office just a year ago to facilitate its international cases. COVID-19 shutdowns hit that operation in January, Tuchmann said, in a sort of preview of what was to come in the U.S. But now, he said, he’s hearing that lawyers in Singapore and Beijing are going back to their offices and resuming work.

“They’re sort of on the other side of it,” he said. “It’s hopeful that we’ll be in the same place soon.”

The views expressed in this article are not those of Reuters News.

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