Posted By Jeffrey Zaino, Esq., Tuesday, July 28, 2015

Updated: Monday, July 27, 2015

In October 2013, the American Arbitration Association (AAA) amended the Commercial Rules and made a number of changes. The rules had not been amended for several years. One significant change to the rules was to add the new Rule 9 requiring mandatory mediation for cases where a claim or counterclaim exceeds $75,000. The addition of this rule has had a positive impact with respect to encouraging both mediations and settlements.

Rule 9 reads as follows:
In all cases where a claim or counterclaim exceeds $75,000, upon the AAA’s administration of the arbitration or at any time while the arbitration is pending, the parties shall mediate their dispute pursuant to the applicable provisions of the AAA’s Commercial Mediation Procedures, or as otherwise agreed by the parties. Absent an agreement of the parties to the contrary, the mediation shall take place concurrently with the arbitration and shall not serve to delay the arbitration proceedings. However, any party to an arbitration may unilaterally opt out of this rule upon notification to the AAA and the other parties to the arbitration. The parties shall confirm the completion of any mediation or any decision to opt out of this rule to the AAA. Unless agreed to by all parties and the mediator, the mediator shall not be appointed as an arbitrator to the case.

The AAA saw a 51% increase in commercial mediations from 2013 to 2014 and a large increase in clients opting to mediate after initially filing for arbitration. In 2014, 61% of AAA business-to-business cases were resolved prior to going to award and 43% of those cases were resolved so early that they incurred no arbitrator compensation. There is a clear link between Rule 9 and increases in the AAA mediation caseload and settlements on cases initially filed as arbitrations. 

Though the parties can opt out of Rule 9, the rule has increased positive mediation dialogue between the AAA, parties and counsel. The rule eliminates the “perception of weakness” concern that some parties and counsel may have about merely starting the conversation about mediation. Mediation is now being deemed an important “step” in the arbitration process with the ultimate goal to potentially reach early settlement and avoid a costly arbitration process. Some parties are even opting for a two track process to conduct a mediation session while simultaneously keeping the arbitration process going. 

The International Centre for Dispute Resolution (ICDR), the international branch of the AAA, also amended its rules on June 1, 2014 to include discussion about mediation. 

Article 5 of the amended rules reads as follows:
Following the time for submission of an Answer, the Administrator may invite the parties to mediate in accordance with the ICDR’s International Mediation Rules. At any stage of the proceedings, the parties may agree to mediate in accordance with the ICDR’s International Mediation Rules. Unless the parties agree otherwise, the mediation shall proceed concurrently with arbitration and the mediator shall not be an arbitrator appointed to the case.

It is anticipated that this addition to the ICDR rules will also increase mediations.