Editor: Why has CPR introduced administered arbitration rules?
Bryan: For over 30 years, top-flight global lawyers have used CPR’s non-administered rules to resolve commercial disputes. In response to users’ requests, CPR is now offering administered arbitration rules for those requiring an administering authority. They became effective July 1, 2013. With more worldwide companies signing CPR’s Corporate Policy Statement on Alternatives to Litigation and the 21st Century Corporate ADR Pledge, CPR is witnessing an increased demand for administered arbitration rules. CPR’s administered arbitration rules were drafted by users for users and offer the greatest degree of flexibility and control available, while minimizing overall costs. The new rules represent another option in the ADR toolbox for highly complex legal disputes.
Editor: Who drafted the CPR-administered arbitration rules?
Bryan: A subcommittee of CPR’s Arbitration Committee – comprising leading corporate counsel, lawyers, academics and neutrals seeking to improve the quality of arbitration – drafted these rules. They created the rules to offer the greatest degree of flexibility and control available, while minimizing overall costs for those needing an administering authority.
Editor: What is the difference between CPR’s administered arbitration rules and non-administered rules?
Bryan: The rules are substantially the same except for modifications related to CPR’s administrative role, which includes billing, selection of the arbitrator(s), ensuring the smooth interface between parties and arbitrator/tribunal, review of awards, and oversight to ensure the process occurs in a timely manner.
Editor: Why should litigators use the new CPR rules?
Bryan: The rules are carefully tailored only to what parties need from an administering organization and no more. They are built upon CPR’s experience with ad hoc/self-administered arbitration and parties’ requests for assistance. The rules are unique in that they are designed to increase quality, lower costs and increase efficiency.
Editor: How do the rules increase quality?
Bryan: The new rules are built upon CPR’s non-administered rules and are designed to increase the quality of the arbitration process. They ensure that all arbitrators are independent and neutral – no exceptions. They also ensure the application of law by including an explicit rule that states, “[the] Tribunal shall apply the substantive law(s) or rules of law designated by the parties as applicable to dispute.” We have included our innovative screened selection process in which arbitrators can be selected using a screened process, allowing for party selection without the arbitrators knowing which party made the selection to enhance neutrality and independence; broad confidentiality provisions that apply to parties, arbitrators, and CPR (and not just arbitrators and the ADR provider); and our independent challenge review panel, whereby an independent panel of practitioners is available to decide arbitrator challenges.
Editor: How are the rules designed to lower costs?
Bryan: CPR’s arbitration subcommittee went to considerable lengths to design the new rules in ways that help to lower the overall costs of arbitration. For example, the rules include a single fixed filing fee so that there are no separate filing fees for counterclaims. They also include a fixed fee scale that is based on categories of amounts in disputes and provides for more predictable, lower fees for higher disputes. CPR has also capped administrative costs, so for disputes above $500 million, administrative fees are capped at $34,000, absent special circumstances. And, we have included a provision by which unexpended advances on arbitrators’ fees and expenses are returned with earned interest.
Editor: How are the rules designed to increase efficiency?
Bryan: The rules have been designed to ensure the greatest amount of efficiency possible. For example, we have included limits on time frames, where CPR must approve any time frame beyond established benchmarks. We have authorized the tribunal to suggest mediation/settlement at any stage, and this is not just limited to parties’ initiatives. And, we have included an easy commencement process without cumbersome filing requirements.
Editor: Do the administered arbitration rules enable the use of CPR’s panels of highly distinguished neutrals?
Bryan: Yes. CPR maintains an elite roster of highly qualified arbitrators with specific experience in complex commercial matters. CPR neutrals are highly credentialed by CPR, both internally and by peer review committees, to ensure they possess superior qualifications. Our panelists are grouped by both specialty and geographic location. For example, CPR’s Global Panel contains neutrals located outside of the United States. CPR’s Cross-Border Panel contains U.S.-based neutrals experienced in transnational or cross-border disputes. CPR’s U.S. Regional Panels contain highly regarded leaders of the bench, bar and academia from major cities throughout the U.S. who are available to resolve complex business and public disputes nationwide. CPR’s Specialized Panels are assembled in response to CPR member requests and currently focus on 20-plus areas of expertise.
Editor: How is a neutral added to CPR's panels?
Bryan: CPR invites high-quality neutrals to apply to the panel and reviews unsolicited applications through the website. Admission to one of CPR's Specialty Panels may also include review by a select panel of high-end users, peers and/or academics. Candidates are screened for their ADR expertise and training, and candidate references are asked to comment specifically on the applicant’s qualifications to serve on large, complex commercial disputes. Qualification to the CPR roster is demanding, and available openings are very limited.
Editor: Under the new rules, how would I begin a case?
Bryan: Claimant sends the Notice of Arbitration to respondent with an electronic copy to CPR and the $1,750 filing fee. The commencement date is the date CPR is in receipt of the notice of arbitration and filing fee. CPR notifies respondent of the deadline to file the Notice of Defense, which is 20 days after notification of commencement date (date on which CPR is in receipt of notice and filing fee). The Notice of Defense may include any counterclaim within the scope of arbitration clause. If a counterclaim is asserted, CPR notifies the claimant of the response date, which is 20 days after receipt of a counterclaim or as otherwise set by tribunal. There is no separate filing fee for any counterclaim.
Editor: Does CPR review the award?
Bryan: CPR performs a limited review of format, clerical, typographical or computational errors or any errors of a similar nature before delivering the award to the parties.
Editor: Who determines the arbitrator’s fees and advances?
Bryan: Each arbitrator sets his or her own fee, which is disclosed to the parties during the selection process. If there is disagreement concerning the arbitrator fees, an appropriate rate will be set by CPR and confirmed to parties. Compensation for each arbitrator will be fully disclosed to the tribunal and parties. The tribunal determines any necessary advances and advises CPR, which will invoice parties in equal shares (unless otherwise agreed). CPR deposits advances with any surplus funds reverting to parties at the close of the proceedings.
Editor: What are CPR’s fees?
Bryan: CPR’s fees offer certainty and are user-friendly. They consist of two components: (1) a nonrefundable filing fee of $1,750 (not applicable to counterclaim) and (2) a flat administrative fee based on a scale of amounts in dispute; the fee is not a percentage of the amount in dispute. The flat administrative fee is based on the award being rendered within 12 months after initial pre-hearing conference. An additional $2,000 fee may be charged for each additional six-month period thereafter. Fifty percent of CPR’s administrative fee is refunded for cases settled or withdrawn prior to the appointment of the tribunal. After appointment, any refund is subject to CPR’s discretion. CPR reserves the right to adjust the administrative fee based on developments in the proceeding, such as an increase in the amount in dispute.