Arbitration clauses in most insurance and reinsurance contracts are remarkable for how little they say about the process. The most basic form of arbitration clause states only that, if a dispute arises, the parties will arbitrate rather than litigate. Exactly what “arbitration” means usually remains undefined. A typical clause may add a few barebones terms regarding the criteria and process for selecting arbitrators, the situs of the arbitration, and perhaps a mention of the arbitrators’ authority (e.g., an honorable engagement provision). Many important elements simply go unmentioned, including motions, discovery, pretrial conferences, subpoenas, briefing, sworn testimony, and evidentiary hearings. Timing also receives scant attention: deadlines commonly appear in only the section addressing arbitrator-selection and possibly in a limit on when arbitrators must render the award (e.g., 90 days after umpire selection) – though cutoffs for awards are notoriously toothless.
Facing so many open issues, arbitrators usually convene an “organizational meeting” (“OM”) early in the process. The OM serves two key functions: (a) to launch the proceeding, including ensconcing the arbitrators (the arbitrators disclose any potential conflicts, and the parties accept the panel and issue hold harmless agreements); and (b) to establish the schedule and procedural infrastructure for the process (e.g., types of permitted discovery and the applicable timeframes, terms regarding confidentiality, protocols for prehearing motions, rules for when ex parte communications are permissible, and dates for briefing and the hearing). After identifying the usual topics that OMs cover, this article argues in favor of more creative use of the organizational meeting and suggests some added elements that, where appropriate for a particular dispute, might lead a better arbitration.
The Usual Agenda Items
The ARIAS•U.S. Sample Agendaii identifies the following topics for the OM:
- Arbitrator disclosures of potential conflicts of interest
- Formal acceptance of the arbitrator(s)
- Hold harmless agreement
- Payment arrangements for the umpire’s fees
- Confidentiality
- Cut-off(s) for ex parte communications with party-appointed arbitrators
- Brief statement of each party’s position (optional)
- Witnesses: anticipated hearing/deposition witnesses as well as expert witnesses
- Discovery – types, privilege issues, and schedule
- Procedures for dealing with discovery disputes
- Collateral estoppel/res judicata issues (if appropriate)
- Other preliminary issues (if appropriate)
- Pre-hearing security (if appropriate)
- Pre-hearing briefs
- Form of the final award
In addition to the sample agenda, ARIAS•U.S. provides other resources regarding organizational meetings, including: (a) the Practical Guide; (b) a Comprehensive Arbitration Scheduling Order in Sample Form 4.1; and (c) the ARIAS•U.S. Rules. Among other things, the Practical Guide recommends that at the OM the arbitrators should issue “an order establishing a comprehensive schedule with deadlines for as many activities as possible through the beginning of the hearing.”iii ARIAS•U.S. Sample Form 4.1 provides a template for a comprehensive scheduling order. This sample order requires that the parties and arbitrators set deadlines for sixteen events (starting with document requests and running through to the dates for the final hearing). The sample order also contemplates that the participants will specify protocols for ten elements, including detailed provisions regarding discovery and trial materials. Recognizing the challenges of preparing a comprehensive schedule, the Practical Guide recommends that “[t]o the extent possible, the parties should confer in advance of the organizational meeting and attempt to agree on scheduling deadlines . . ..”iv The ARIAS Rules contain similar lists of topics for the OM but are somewhat more prescriptive than the Practical Guide and Sample Forms.v
The AIRROC Dispute Resolution Procedure (“AIRROC Procedure”)vi establishes a concise process that notably eliminates discovery and testimony, unless the parties agree otherwise. Consistent with the Procedure’s streamlined nature, Section IV addresses the OM without mentioning several items that appear in the ARIAS•U.S. Sample Agenda, including: special arrangements for the umpire’s compensation; confidentiality, witnesses (the AIRROC Procedure generally uses only documents), discovery (Section IV.B. sets a default rule that no discovery will occur unless the parties agree otherwise or the arbitrators, sua sponte, order document production); collateral estoppel/res judicata; other preliminary issues; pre-hearing security (though Section IV.C. bars motions or applications for preliminary relief, “unless the parties agree otherwise”); prehearing briefs; and the form of the final award.
Mistaking Brevity for Quality
Too often, parties, counsel, and arbitrators treat the organizational meeting as a pro forma exercise in which speed and completion signify quality: a “good org meeting” flies through the agenda and schedule in under 30 minutes. Although that paradigm may hold a superficial appeal, no evidence suggests that devoting less time to planning produces a better plan. Checking off all the items on a lengthy agenda might seem like an accomplishment, but doing so with rote answers could cause more harm than leaving some elements temporarily unresolved. To be sure, the OM should not waste the participants’ time nor needlessly defer issues. Brevity and thoroughness, however, are more by-products of a well-managed meeting than objectives unto themselves. A successful OM is one that prescribes and launches a process that will resolve the parties’ dispute(s) effectively, efficiently, and justly. Ultimately, the best measure of an OM’s quality lies in the degree to which it leads to a well-functioning arbitration.
Mindful Planning and Creative Options for Consideration at the OM
Sherlock Holmes famously solved a mystery by recognizing the significance of something missing: a dog that did not bark.vii When arbitrants attempt to design an appropriate process for their dispute, they should recognize the possibility that a valuable solution could be absent from the standard resources and their past practice. The lists of suggested topics for organizational meetings that AIRROC and ARIAS•U.S. provide are not exhaustive, and both sources recognize the parties’ right to adopt alternative procedures. For example, Section IV of the AIRROC Procedure contemplates arbitrations without discovery, preliminary relief, and live testimony, but it also allows the parties, by agreement, to include any of these elements. Similarly, the ARIAS•U.S. sample agenda leaves an opening for “other preliminary issues (if appropriate),” and Comment D to Section 3.13 in the ARIAS•U.S. Practical Guide directs the arbitrators to consider any procedures or rules the parties may have agreed to follow. The materials that AIRROC and ARIAS•U.S. provide are extremely useful starting points, but parties remain free to adopt different procedures. The OM is a good place to consider those choices.
The great Yogi Berra observed: “If you don’t know where you’re going, you will end up someplace else.”viii In the arbitral context, the more thought and effort that the parties put into the plan for their arbitration, the less chance their process will land elsewhere. The nearly boundless flexibility of arbitration creates possible advantages over litigation, but it also imposes additional costs. Unless the parties adopt rules in advance, each time a dispute arises, the parties will need to select the procedures they will use. Although having to reinvent the applicable processes for each dispute may seem wasteful, the parties agreed to incur that cost when they chose to arbitrate without supplying the details. Moreover, the absence of prescribed rules and procedures gives the participants broad discretion to design a bespoke process well-suited to the particular facts and circumstances of the current dispute. Far too often, arbitral participants squander this opportunity: like generals fighting the previous war, they simply revert to past practice in selecting the elements of their process. Indeed, parties opposing creative proposals often invoke “tradition” as a protective shield — as if prior experience necessarily holds the best solution for any current circumstances. In a changeable environment, previous experience does not assure current suitability. Indeed, embracing without examination a solution that seemed to work in the past may provide to the new arbitration only the potentially misleading comfort of familiarity. Instead of reflexively resorting to the usual, thoughtfully analyzing each idea – old or new – is the better way to select the dynamics and plan for the arbitration.
What Else Might Be on the Menu?
Here are a few ideas of alternative processes that the OM might include – in appropriate circumstances:
- Phasing and expedited consideration: Mark Twain is credited with the following proverb: “The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one.”ix When attempting to resolve multiple issues in a complex dispute, it may be wise in some instances to segment the arbitration process into phases – especially where the outcome of one issue might obviate the need to pursue another controversy (e.g., allegations of bad faith may hinge on an initial determination that a party’s position on an underlying issue lacked merit). The OM is a great time to identify all the problems and to assess how best to work through any knotty tangle, including whether it makes sense to prioritize certain issues for decision before reaching others.
- Preliminary relief, including pre-hearing security: The maxim “justice deferred is justice denied”x certainly applies when a claimant wins a monetary award against a respondent that has become judgment-proof. Where preliminary relief is available,xi the OM may provide a critical opportunity to assess whether the respondent is or will soon be insolvent and whether it is appropriate to provide temporary relief to preserve resources. For example, an interim award might enjoin a party from disposing of a unique asset. Similarly, an order requiring that the respondent post pre-hearing security might help ensure that the claimant has some source of recovery if it were to win. Thus, the OM may be a crucial stage to evaluate whether preliminary relief is warranted.
- Different ways to approach and control discovery: Most insurance and reinsurance arbitrations allow some limited pre-trial discovery, typically in the form of document requests and depositions. As noted above, even the streamlined AIRROC Procedure permits the parties to agree to some discovery or for the arbitrators to order the production of specified documents. Discovery in arbitration, however, is both a frequent source of complaints and a focal point for arbitral reform, because it is expensive and time-consuming.xii Suggestions for avoiding excessive discovery often involve the arbitrators’ exercising greater authority to ensure that the attendant costs are proportional to the nature and value of the parties’ dispute(s).xiii In a given case, it may be worth considering whether other discovery methods, such as targeted requests for admission or narrowly drawn interrogatories, might be more efficient ways for the parties to obtain information. The OM is an optimal time to discuss the best mechanisms and to address how to manage discovery.
- Dispositive motions: Motions to dismiss or for summary adjudication are called “dispositive” because of their potential to “dispose” of or resolve a claim, a defense, or even an entire dispute. In a well-known case, the respondent requested permission at the OM to move immediately for a summary ruling that the contracts in dispute were invalid, based on an allegedly fatal admission in the petitioner’s position statement.xiv The petitioner’s statement disclaimed any agency relationship with a reinsurance intermediary, apparently in hopes of distancing the petitioner from the broker’s alleged misconduct.xv The respondent argued that, absent any agency relationship, the contracts were void, because the intermediary lacked authority to negotiate on the petitioner’s behalf. A majority of the arbitrators agreed to allow the respondent to file the dispositive motion, and they subsequently granted that motion. Undoubtedly the petitioner was disappointed. This ruling, however, did save both parties considerable time and money by ending the arbitration early in the process. Depending on the facts and circumstances, the OM may be an opportune time to consider whether and, if so, when, a dispositive motion would be appropriate.
- Witness statements of written submissions: For proceedings that allow testimony, the parties might conserve precious hearing time by using sworn submissions from witnesses under a party’s control, in lieu of conducting direct examinations. The OM offers a good opportunity to discuss this practice and, depending on the circumstances, adopt it for a proceeding.xvi Recognizing the likelihood that lawyers will draft the written submissions, it may be prudent to clarify that witness statements must be limited to factual accounts, rather than presenting commentary, argument, and advocacy.xvii
- Experts witnesses and their roles: The AIRROC Procedure implicitly allows for expert witnesses, because it (a) recognizes the parties’ right to agree to include testimony in the hearing, without limiting the testimony to fact witnesses; (b) grants the arbitrators discretion to permit the parties to submit affidavits, also without limiting the affiants to fact witnesses; and (c) refers to claims for “expert fees” as among the many items the parties release in the hold harmless provision.xviii Thus, even though the AIRROC Procedure does not mention expert witnesses as a topic to cover, arbitrators operating under the Procedure are certainly free to raise this issue at the OM. The ARIAS Practical Guide affirmatively suggests that “[a]t the organizational meeting, the panel may ask the parties whether they foresee a need to offer expert testimony at the hearing.”xix In any arbitration, the need for experts hinges on the role they would play in resolving the issue(s) in dispute. For example, in civil litigation in the United Kingdom, courts allow expert witnesses to testify only if they will assist the decisionmaker and not act as hired guns for parties: each proposed expert must agree in writing to provide “objective, unbiased opinions on matters within their expertise” and “not assume the role of an advocate.”xx A different solution for the advocacy concern is to allow the arbitration panel to retain its own expert.xxi In any event, arbitrators might ask at the OM about the potential for expert witnesses and explain the panel’s views about the role(s) of these witnesses.xxii
- Updates, Milestones, and Case Reviews: When we plan, we humans tend to make assessments of the timing, benefits, and likelihood of success that are unduly optimistic — a cognitive bias that behavioral psychologists refer to as the “planning fallacy.”xxiii Moreover, unforeseen events can disrupt any plan, even a conservative one. Witnesses can become incapacitated; important records can be lost in a fire; and subsequent corporate transactions can dramatically change the course of proceedings. These are, of course, just a few examples of the reality that the participants in an arbitration cannot always predict, much less control, the future. By building into the plan occasions for periodic check-ins and potential course corrections, the participants can improve its resilience and adaptability. Thus, the participants should discuss at the OM how to deal with unexpected developments and when to re-assess the plan.
Conclusions
Although organizational meetings cover several housekeeping elements, their central purpose is to develop the plan, schedule, and program for how the arbitration will proceed to conclusion. This article identifies several suggestions for using organizational meetings to improve arbitrations.
Arbitration is, however, not only a human process but an adversarial one. To quote the comic character Pogo: “We have met the enemy, and he is us.” Thus, some caveats are in order. When considering features proposed to be included in an arbitral process, arbitrators must recognize the potential for abuse and self-interest: a party may advocate for a certain approach only to cause delay, inflict pain on the opponent, or advance some other strategic goal. The suitability of any idea requires independent consideration and objective judgment. In addition, this article does not attempt to list exhaustively all the features that might enhance an organizational meeting. That list cannot exist, because one of arbitration’s great strengths lies in the participants’ ability to fashion approaches that are novel and/or unique.
The choices the participants make at the OM will set the course for the arbitration. Accordingly, these decisions should reflect considered analysis, creative problem-solving, and thoughtful planning. Facile choices make the outcome of the OM a form of lottery in which the suitability of the plan becomes anyone’s guess. When, however, the participants invest time and thought into the OM by exploring the options and carefully selecting the infrastructure and schedule for their proceeding, they are more likely to garner significant savings and a better arbitration.
i Dan FitzMaurice appears on the AIRROC list of arbitrators and is an ARIASïU.S. certified arbitrator. For over forty years he practiced law at Day Pitney LLP. As a trial attorney, he represented domestic and international clients, serving as lead counsel in over 200 insurance and reinsurance arbitrations. Dan obtained a Bachelor of Science from the University of Connecticut and a Juris Doctor from the University of Michigan.
ii ARIASïU.S. Sample Form 3.1: Agenda for the Organizational Meeting, https://www.arias-us.org/wp-content/uploads/2017/04/ARIAS-U.S.-Sample-Form-3.1-Agenda-for-the-Organizational-Meeting_Fillable.pdf
iii ARIAS•U.S. Practical Guide § 4.1
iv ARIAS•U.S. Practical Guide, Ch. 4.1.
v For example, instead of recommending that the parties confer in advance of the OM, the ARIAS Rules require those discussions:
Prior to the organizational meeting, the Parties shall confer and seek agreement on all issues that are expected to be considered at the organizational meeting, with a focus on those items identified in ¶10.7
ARIAS Rule 10.1. Similarly, where item 8 in the ARIAS sample agenda identifies the “[n]eed for/anticipated use of expert witnesses (if appropriate)” as a topic for discussion, ARIAS Rule 10.7(f) directs the arbitrators to determine at the OM “[t]he extent to which expert evidence will be allowed . . .”
vi The AIRROC Dispute Resolution Procedure (August 2023 Edition) (“AIRROC Procedure”), https://airroc.memberclicks.net/assets/docs/DRP/August%202023%20FINAL%20VERSION.pdf
vii Sir Arthur Conan Doyle, The Complete Sherlock Holmes: Silver Blaze 335, 349 (Doubleday 1936)
viii See Forbes, https://www.forbes.com/quotes/10405/
ix See goodreads.com, https://www.goodreads.com/quotes/219455-the-secret-of-getting-ahead-is-getting-started-the-secret
x See Fred Shapiro, You can quote them, Yale Alumni Magazine, Vol. LXXIV, No. 1 (Sept/Oct 2010) (discussing the origins of “justice delayed is justice denied”).
xi The AIRROC Procedure proscribes motions or applications for preliminary relief, absent agreement of the parties. AIRROC Procedure, Section IV.C. Where the respondent is insolvent or nearly so, it seems unlikely that the respondent would agree to allow the petitioner to pursue preliminary relief. In these circumstances, the arbitrators might consider at the OM alternative ways to address the respondent’s possible insolvency. For example, the arbitrators might expedite the schedule or permit the petitioner to seek summary adjudication.
xii See, e.g., Steven C. Bennett, “Hard” Tools for Controlling Discovery Burdens in Arbitration, 73 DRJ No. 4 (2018); Kevin Mason, Will Discovery Kill Arbitration, 2020 JDR Iss. 1, Art. 14.
xiii See, e.g., Bennett, “Hard” Tools, supra; see also Stephen L. Rispoli, James E. Wren, & Daniella McDonagh, When to Leave the Stones Unturned: Using Proportionality to Navigate Discovery Efficiently, Effectively, and Ethically, 107 Marquette L. Rev. 487 (2003).
xiv Sphere Drake Ins. Ltd v. All American Lift Ins. Co., 307 F.3d 617, 619-20 (7th Cir. 2002) (describing the dispute and arbitration proceeding and then concluding that the District Court improperly vacated an award in the respondent’s favor based on the alleged “evident partiality” of respondent’s party-appointed arbitrator); Sphere Drake Ins. Ltd v. All American Lift Ins. Co., 2004 WL 442640 (N.D. Ill. March 8, 2004) (confirming the final award in favor of the respondent).
xv In a parallel court proceeding, the respondent claimed that its broker exceeded its authority in accepting the reinsurance contracts and that the petitioner’s broker was aware of that fact but conspired with the respondent’s broker to place the contracts. Sphere Drake, 2004 WL 442640 at *11 (describing the respondent’s allegations of fraudulent conspiracy on the part of the reinsurance intermediaries for both parties).
xvi The “exchange of witness statements” appears among the items on a useful checklist that American Arbitration Association has devised for the “preliminary hearing” — an OM. Commercial Arbitration Rules and Mediation Procedures (2022), American Arbitration Association, Preliminary Hearing Procedures. P-2(a)(xiv)
xvii See, e.g., Douglas, Jones AO & Robert Turnbull, Memorials and Witness Statements: The Need for Reform, The International Journal of Arbitration, Mediation and Dispute Management, Vol. 88, Iss. 3, 339 (2022).
xviii AIRROC Procedure, Sections IV.D, E, and VI.A.
xix ARIAS•U.S. Practical Guide § 4.2 (Use of Expert Witnesses).
xx UK Civil Procedural Rules 1998, Part 35, Rule 35.3.
xxi See, e.g., Steven Bennett, Use of Experts in Arbitration: Alternatives for Improved Efficiency, Dispute Resolution Journal, Vol. 73, No. 2 at 83-85 (2018).
xxii See Issues for Arbitrators to Consider regarding Experts, ICC International Court of Arbitration Bulletin, Vol. 21 No. 1 (2010).
xxiii Kahneman, Daniel and Amos Tversky, 1979. “Intuitive Prediction: Biases and Corrective Procedures.” TIMS Studies in Management 12: 313–327.
