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Arbitral proceedings

Starting an arbitration proceeding

What is needed to commence arbitration?

The Federal Arbitration Act specifies no requirements for the commencement of arbitration, so arbitrations must normally be commenced in accordance with the applicable procedural law or rules. Further, the courts will not typically determine procedural compliance: “For questions of so-called ‘procedural arbitrability,’ the arbitrator, not the court, generally decides whether the parties complied with the agreement’s procedural rules” (Gen Warehousemen & Helpers Union Local 767 v Alberton’s Distrib, Inc, 331 F.3d 485, 488, quoting John Wiley & Sons, Inc v Livingston, 376 US 543, 557 (1964)) (inner quotations omitted)). 

Limitation periods

Are there any limitation periods for the commencement of arbitration?

The Federal Arbitration Act provides no limitation periods for the commencement of arbitration. Any limitations or restrictions will therefore depend on:

  • the agreement between the parties;
  • the type of dispute; and
  • any applicable statute of limitations under the applicable substantive law. 

Procedural rules

Are there any procedural rules that arbitrators must follow?

The Federal Arbitration Act provides no specific procedural rules that arbitrators must follow. However, the award can be set aside if the arbitrators do not allow the parties to present their case or to present evidence. Section 10(a) of the act provides:

the United States court in and for the district wherein the award was made may make an order vacating the award…(3) where the arbitrators where guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy”. 

Dissenting arbitrators

Are dissenting opinions permitted under the law of your jurisdiction?

The Federal Arbitration Act does not address whether dissenting opinions are permitted, but courts can confirm an award where an arbitrator has dissented. In Merck & Co PeriCor Therapeutics, Inc, 2016 US Dist LEXIS 112976, *12, *40 (SDNY, August 24 2016), an award was confirmed where one of the arbitrators dissented from the majority of the panel.

Judicial assistance

Can local courts intervene in proceedings?

The US district courts maintain original jurisdiction, but the Federal Arbitration Act expressly provides that the courts can order a stay of court proceeding pending arbitration  (9 USC Sections 3, 4 and 203). In the event that arbitration has commenced, the preclusive effect of the arbitration on a concurrent US court proceeding and the court’s authority to issue a stay of arbitration or injunctive relief (ie, to intervene in the arbitration) are unclear. In Dean Witter Reynolds Inc v Byrd, 470 US 213, 223 (1984), the court stated: “The question of what preclusive effect, if any, the arbitration proceedings might have is not yet before us, however, and we do not decide it.” Justice White concurred:

The Court’s opinion makes clear that a district court should not stay arbitration, or refuse to compel it at all, for fear of its preclusive effect. And I can perceive few, if any, other possible reasons for staying the arbitration pending the outcome of the lawsuit” (id 225).

On the other hand, it is well established that US district courts can assist ongoing international proceedings, including arbitrations. For example, 28 USC Section 1782 –provides:

The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation.”

Can the local courts assist in choosing arbitrators?

US district courts can assist the parties in choosing an arbitrator, but only when the parties cannot agree or when there is an arbitrator vacancy (9 USC Sections 5 and 206).  

What is the applicable law (and prevailing practice) where a respondent fails to participate in an arbitration? Can the courts compel parties to arbitrate? Can they issue subpoenas to third parties?

When a counterparty refuses to participate in arbitration, the aggrieved party:

may petition any United States district court which, save for such agreement, would have jurisdiction . . . for an order directing that such arbitration proceed in the manner provided for in such agreement” (9 USC Section 4).

Section 7 of the Federal Arbitration Act also provides that arbitrators are authorised to summon third parties to the proceedings “in the same manner as subpoenas to appear and testify before court”, and that:

if any person or persons so summoned to testify shall refuse or neglect to obey said summons, upon petition the United States district court… may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for comtempt in the same manner provided by law for securing the attendance of witnesses or their punishment for neglect or refusal to attend in the courts of the United States.

Third parties

In what instances can third parties be bound by an arbitration agreement or award?

Arbitration agreements are typically enforceable only against the signatories to the agreement. However, a third party can be bound by an arbitration agreement (or award) based on several theories for binding non-signatories. Such theories include incorporation by reference, assumption, agency, veil-piercing or alter ego, and estoppel (see Thomson-CSF, SA v American Arbitration Ass’n, 64 F 3d 773, 776 (2d Cir 1995)).

Default language and seat

Unless agreed by the parties, what is the default language and location for arbitrations?

The Federal Arbitration Act does not address the default language or location of arbitrations. These are therefore determined by the parties or, if the parties cannot agree, by the default rules (if any) provided in the applicable procedural law or rules.

Gathering evidence

How is evidence obtained by the tribunal?

The Federal Arbitration Act does not address the applicable evidence procedure in arbitrations, other than to state that arbitrators may compel the attendance of witnesses and documents at hearings. Procedural matters are therefore determined by the parties, the applicable procedural law or rules, or (if no agreement can be reached) the tribunal.

What kinds of evidence are acceptable?

The Federal Arbitration Act does not address evidence rules applicable to arbitration. The kinds of evidence that are acceptable or admissible will therefore depend on the agreement between the parties and/or the applicable procedural law or rules.

Confidentiality

Is confidentiality ensured?

The Federal Arbitration Act does not require or address confidentiality. Whether confidentiality is ensured will therefore depend on the agreement between the parties and possibly the applicable procedural law or rules.

However, if a party is forced to seek confirmation of an arbitral award in court, the award must be disclosed as part of the application. 

Can information in arbitral proceedings be disclosed in subsequent proceedings?

If an arbitral proceeding is the subject of a subsequent domestic litigation, the award must be produced in that litigation. 

In addition, documents produced in the earlier arbitration are not necessarily shielded from disclosure in subsequent proceedings. In Contship Containerlines, Ltd v PPG Indus, Inc, 2003 US Dist LEXIS 6857, *7 (SDNY, April 17 2003), motion was granted to compel disclosure of expert submissions, correspondences with the panel and arbitrators, submissions to the panel and hearing transcripts that were prepared for the arbitration between the parties. In United States v Panhandle Eastern Corp, 118 FRD 346, 349, 351 (D Del 1988), motion was denied for a protective order against production of documents relating to an arbitration because the movant failed to show “good cause by demonstrating a particular need for protection”.

Ethical codes

What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your jurisdiction?

The Federal Arbitration Act provides no applicable ethical codes or professional standards. However, attorneys participating in an arbitration are subject to the ethical rules of (at least) the state or states in which they are admitted to practise law and the state in which the arbitration is seated. If the arbitrators are also practising attorneys, they are similarly subject to the ethical rules of the state or states in which they are admitted to practise and the state in which the arbitration is seated.

Although not legally binding, ethical codes for arbitrators are also issued by private organisations, which provide guidance on various topics (eg, the Code of Ethics for Arbitrators in Commercial Disputes published by the American Bar Association).

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