Discovery in Commercial Arbitration: How Arbitrators Think

Article excerpt

Discovery in arbitration is different from the virtually unlimited discovery process used in litigation. The reason is that the arbitrator's job is to deliver a faster and less expensive process. This article discusses how arbitrators handle discovery in arbitration and the considerations they take into account when deciding how much and what type of discovery to allow. It also discusses the approaches to discovery taken in arbitration rules and the Revised Uniform Arbitration Act.

When a case has been filed in federal or state court, litigators generally have a good idea of what discovery will be allowed. Federal and state rules of civil procedure set forth the standards for discovery in litigation, and a large body of case law elaborates on these standards.

Do we have anything similar in arbitration? Can counsel and the parties know with reasonable certainty how much discovery will be allowed in their commercial arbitration? What kind of discovery is typically permitted? Are the answers to these questions entirely within the discretion of the arbitrator? Is there a governing standard?

Given the confidentiality of arbitration, there are generally no published arbitral decisions on discovery questions in arbitration. So in this article I set forth some tentative answers to these questions in the context of domestic commercial arbitration based on my personal experience as an arbitrator in over 125 commercial cases, the varied experience of arbitrators with whom I have served. I also discuss the relevant rules of the American Arbitration Association (AAA) and other arbitration institutions, as well as the treatment of discovery in the Revised Uniform Arbitration Act (RUAA).

Rationale for Discovery in Arbitration

Arbitrators generally have three primary objectives in deciding discovery disputes in a commercial case: (1) a speedier disposition than in litigation; (2) a less expensive process than litigation; and (3) a fair opportunity for both sides to prepare and try the case. Satisfying each of these objectives depends in large measure on the amount of discovery allowed in the arbitration. To obtain a speedier and less costly disposition, discovery, which consumes the bulk of time and attorney fees in litigation, needs to be more limited than in litigation. Yet the parties must have the discovery they need for a fair hearing.

As a result, the discovery that is automatic and often virtually unlimited in litigation is subject to close scrutiny in arbitration. The arbitration goals cited above cause arbitrators to require the parties to justify the discovery they seek. There is a bedrock amount of discovery in arbitration, particularly the reasonable disclosure of the parties' claims and defenses and the exchange of relevant documents. But beyond that, parties are generally only allowed to take depositions and serve interrogatories if they can demonstrate a real need for them. Of course, the parties' counsel may agree to more extensive discovery, although that can compromise the two main benefits of arbitration.

Discovery in Commercial Litigation

The discovery phase in a multi-million dollar commercial litigation typically takes years, not months. First counsel for the parties prepare and serve very broadly worded document discovery requests that ask to see all documents "in connection with or relating to" one subject or another. They also invariably prepare lengthy interrogatories and sometimes "requests to admit." They have to review and number their client's documents for document production purposes. Often, each side files objections to the other side's document requests, which could include claims of attorney-client privilege or attorney work product. The parties could end up in protracted motion practice fighting about these documents. Meanwhile, each side serves deposition notices on the other. It is not unusual to receive a dozen or even dozens of such notices. …