Earlier this year, the International Institute for Conflict Prevention & Resolution (“CPR”) released a “Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration” (“Protocol”). See http://www.cpradr.org. CPR’s Protocol provides detailed guidance in an effort to achieve a more cost-effective handling of e-discovery in the arbitration context. Similarly, the New York State Bar Association’s (“NYSBA”) House of Delegates adopted the “Report on Arbitration Discovery in Domestic Commercial Cases” (“Report”) on April 4, 2009, which likewise provides arbitrators with guidance intended to reduce the breadth of and cost affiliated with e-discovery. See http://www.nysba.org. This article provides a summary of CPR’s Protocol and the NYSBA Report, and also addresses the particular concerns in the arbitration context motivating their promulgation.

CPR’s Protocol

In early 2009, CPR released its Protocol to aid in reducing the cost of arbitration, including that incurred through e-discovery. CPR’s senior consultant, Thomas L. Aldrich, has written that the philosophy underlying the Protocol was “that arbitration must be expeditious, cost-effective and fundamentally fair.” Thomas L. Aldrich, Arbitration’s E-Discovery Conundrum: Dealing with Complex Evidence Problems in a Streamlined Process, Nat’l Law Journal, Dec. 16, 2008, available at www.nlj.com. Moreover, Kramer Levin partner and member of CPR’s Panel of Distinguished Neutrals, Michael S. Oberman, believes that the new CPR Protocol “should restore a more streamlined discovery process in arbitration that differentiates arbitration from litigation and provides a marked cost-saving to the client.” Such a restoration should be welcome to parties who, having sought the benefits of arbitration’s expediency and cost-efficiency, are now deluged by a seemingly endless ocean of e-discovery. Lawrence W. Newman, Chairman of the CPR International Committee on Arbitration, wrote in the Protocol’s Introduction: “The CPR Protocol addresses concerns often expressed by users of arbitration . . . [one being] that arbitration is becoming increasingly more complex, costly and time-consuming.” Protocol at 3.

The Protocol’s “Disclosure of Electronic Information” instructs a tribunal to “bear in mind the high cost and burdens associated with compliance with requests for the disclosure of electronic information.” Id. at 7. It recognizes that “email and other electronically created documents found in the active or archived files of key witnesses or in shared drives used in connection with the matter at issue are more readily accessible and less burdensome to produce when sought pursuant to reasonably specific requests.” Id. Therefore, the Protocol discourages the costly and burdensome production of electronic materials from “a wide range of users or custodians” and indicates that such requests “should be granted only upon a showing of extraordinary need.” Id. Likewise, requests for back-up tapes or fragmented or deleted files should only be granted if the requesting party demonstrates “a reasonable likelihood that files were deliberately destroyed or altered by a party in anticipation of litigation or arbitration. . . .” Id.

Due to the “high cost and burden” of preserving electronically stored information (“ESI”), CPR’s Protocol encourages scheduling an early preliminary conference to address the scope of preservation. Id. at 8. Moreover, in ordering the disclosure of ESI, the Protocol encourages weighing “burdens versus benefits”:

Arbitrators should carefully balance the likely value of documents requested against the cost and burdens . . . involved in producing the documents or information requested. Where the costs and burdens of disclosure requested are likely to be substantial in comparison to the amount of dispute or the need for the information to aid in resolving the dispute, the tribunal should ordinarily deny such requests. . . .

Id. at 8-9. Finally, to aid parties, CPR provided four “Modes of Disclosure” specific to ESI. Id. at 11. Mode A, the most limited, provides for the exchange of copies of ESI “to be presented in support of that party’s case.” Mode B calls for disclosure of ESI maintained by specified custodians during the period between which the parties contracted and the dispute commenced. Additionally, Mode B provides for ESI disclosure from “primary storage facilities only” and not from back-up servers. Mode C expands upon Mode B to include a wider range of custodians and a broader time-frame. Furthermore, the parties may agree to disclose, “upon a showing of special need and relevance,” deleted, fragmented or other difficult to obtain ESI, barring the use of forensics. Finally, Mode D provides for the broadest disclosure, allowing ESI “relevant to any party’s claim or defense, subject to limitations of reasonableness, duplicativeness and undue burden.”

NYSBA Report

Similar to CPR’s Protocol, the NYSBA’s recently adopted Report attempts to curtail the “inject[ion] into arbitration [of] expensive elements that had traditionally been reserved for litigation . . . [among them] massive requests for documents, including electronic data.” Report at 1. In an effort to restore arbitration to a “more truncated proceeding,” the Report lists ten precepts, including one specifically relating to e-discovery (the “Precept”). The Precept first encourages the arbitrator to familiarize himself “with the technological issues that arise in connection with electronic data” so as to effectively advise the parties and oversee cost containment. Additionally, similar to the CPR, the Precept recommends only the production of ESI used in the ordinary course of business — not ESI stored on back-up servers or tapes — without a showing of “compelling need.” Finally, the Precept discourages the production of metadata, and, like the CPR Protocol, urges the arbitrator to weigh the proportionality of the costs and burdens with the “nature and gravity of the dispute or to the relevance of the materials requested.”

Conclusion

CPR’s Protocol and the NYSBA’s Report build upon two publications released last year by other arbitration institutions. In 2008, both the International Centre for Dispute Resolution (“ICDR”) and the Chartered Institute of Arbitrators (“CIArb”) issued e-discovery guidance. While the ICDR’s report provides sparse e-discovery cost-reduction guidance to arbitrators, the CIArb’s “Protocol for E-Disclosure in Arbitration” has been praised for its detailed instructions on controlling e-discovery at every stage of arbitration. All four of these publications suggest what could be a welcome trend: arbitral institutions increasingly taking serious aim at reducing the cost of e-discovery in arbitration. Consistent with these arbitral bodies’ stated intent, CPR’s Protocol and the NYSBA’s Report provide parties and arbitrators with the tools necessary to combat the tidal-wave of expenses associated with e-discovery. If successful in achieving these aims, their e-discovery provisions may restore arbitration to its position as the cost-effective and time-sensitive alternative to litigation.