2006/Vol. 5 No.1 - Hamline Law - Hamline University

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22 THE JOURNAL OF AMERICAN ARBITRATION [Vol. 5:1 required to pay a $2,750 “filing fee” plus $1,250 for a “case service fee” to initiate arbitration proceedings. 90 Also, utilizing an agency can add to the time it takes to arrange the arbitration because there is an additional level of communication required between the administrator, the attorneys, the parties, and the arbitrator(s). 91 Ad hoc arbitration does not rely on an agency, nor its good offices, nor its established rules and procedures. 92 Ad hoc arbitration allows the Amount of Claim Initial Filing Fee Case Service Fee Above $0 to $10,000 $500 $200 Above $10,000 to $75,000 $750 $300 Above $75,000 to $150,000 $1,500 $750 Above $150,000 to $300,000 $2,750 $1,250 Above $300,000 to $500,000 $4,250 $1,750 Above $500,000 to $1,000,000 $6,000 $2,500 Above $1,000,000 to $5,000,000 $8,000 $3,250 Above $5,000,000 to $10,000,000 $10,000 $4,000 Above $10,000,000 * * Nonmonetary Claims ** $3,250 $1,250 *Contact your local AAA office for fees for claims in excess of $10 million. **This fee is applicable when a claim or counterclaim is not for a monetary amount. Where a monetary claim is not known, parties will be required to state a range of claims or be subject to the highest possible filing fee. Id. In addition, Rule 48 of the Arbitration Rules for Commercial Financial Disputes states: Members of the National Roster appointed as arbitrators will be compensated based on the amount of service involved and the number of hearings. Arbitrators shall charge a rate consistent with the arbitrator’s stated rate of compensation, beginning with the first day of hearing. If the parties fail to agree to the terms of compensation, an appropriate rate shall be established with the arbitrator by the AAA and communicated in writing to the parties. Any arrangement for the compensation of an arbitrator shall be made through the AAA and not directly between the parties and the arbitrator. American Arbitration Association, Arbitration Rules for Commercial Financial Disputes, R-48, available at http://www.adr.org/sp.asp?id=22008#ArbRules (last visited Dec. 5, 2005). 90. AAA Practical Guide, supra note 89. 91. Ebe, supra note 87, at 85-86. 92. Joyce J. George, The Advantages of Administered Arbitration When Going It Alone Just Won’t Do, 57 DISP. RESOL. J. 66, 68-69 (Aug.-Oct. 2002). George suggests that the following questions are left to the parties to answer in ad hoc
2006] ARBITRATION: THE BASICS 23 parties to make fundamental decisions relating to the arbitration proceeding. 93 They can write their own rules, decide their own time schedule, and make the proceeding as flexible or inflexible as they choose. Ad hoc arbitration is more informal and more flexible than institutional arbitration. 94 The flexibility of ad hoc arbitration is a benefit; the parties do not have to deal with the bureaucracy of an agency. 95 Flexibility allows parties and their lawyers to use whatever arbitration rules and procedures they desire. 96 With ad hoc arbitration, there are no administrative fees. 97 It can be quicker and cheaper when the parties and their lawyers are in procedural agreement on the process. But there is a two-edged sword to ad hoc arbitration. The parties are responsible for all administrative aspects of the arbitration. The parties must mutually agree on the arbitrators they will use in the proceeding. 98 If one party refuses to agree to an arbitrator, the proceeding cannot begin. Once a serious dispute has arisen between the parties, the cooperation needed to coordinate an arbitration can be unrealistic. 99 Because the rules and procedures are not set, if the parties cannot agree on how to proceed, they may find themselves in court—something they both had hoped to avoid by agreeing to arbitrate—just to litigate issues on how the arbitration: What is the nature of the dispute to be arbitrated? What is the scope of the arbitrators’ jurisdiction? How are notices to be given and when is an answer to be made? What selection process is to be used to name the arbitrators? What if a party fails to select an arbitrator? Should a default procedure be provided? If so, what procedure and how is agreement to be obtained between the parties? How can an arbitrator be removed or disqualified? Where is the arbitration to be held? What is the applicable law? What, if any, rules are to apply to the arbitration? What discovery procedures will be permitted? Can the arbitrator award any provisional remedies? What type of award is required? Is there any method for modifying an award once made? Is the arbitration to be binding? How and when is the arbitrator to be paid? Who pays the costs of the hearing facility? Id. 93. See id. at 68. 94. Rasmussen, supra note 86, at 1833. 95. Ebe, supra note 87, at 86. 96. Tom Arnold, Delay and Cost Booby Traps in Arbitration Practice and How to Avoid Them, CA13 A.L.I.-A.B.A. 99, 104 (American Law Institute—American Bar Association Continuing Legal Education, Course of Study, Jan. 25, 1996). 97. Rasmussen, supra note 86, at 1833. 98. See George, supra note 92, at 68. 99. Thomas E. Carbonneau, International Commercial Arbitration: The Exercise of Contract Freedom in the Making of Arbitration Agreements, 36 VAND. J. TRANSNAT’L L. 1189, 1207 (2003).
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2006/Vol. 5 No.1 - Hamline Law - Hamline University

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