The AAA updates its Commercial Arbitration Rules: What are the key changes?

The American Arbitration Association (AAA) recently issued amendments to its Commercial Arbitration Rules.  The Commercial Arbitration Rules are the AAA’s rules used for business-to-business disputes. The revisions, effective September 1, 2022, are the culmination of a two-year review process that included contributions from stakeholders, including arbitrators, parties, and AAA case managers. 

The amendments provide new rules for consolidation and joinder, not in the prior version, bringing the AAA into alignment with the other prominent arbitration institutions—such as the International Chamber of Commerce and the London Court of International Arbitration—which have long had similar rules.  The amendments also offer improved confidentiality, though still less confidentiality than the rules of other arbitration institutions.  The amendments further provide enhanced efficiency, including by allowing arbitrators to choose a virtual hearing and by regulating the use of dispositive motions, which can provide a speedier resolution of claims.  Finally, the amendments codify the increasingly common practice among tribunals to address cybersecurity at the outset of the arbitration, a practice promoted by the ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitration.

We summarize the most notable changes below.

New procedures for consolidation and joinder requests  

The amendments include a new rule providing procedures for consolidation of parallel arbitrations and joinder of parties to an arbitration.  First, parties may file a request to consolidate two or more existing arbitrations into a single proceeding.  If all parties do not agree to consolidation, the AAA may direct the arbitrator(s) appointed in the first-filed case to decide the consolidation request or, alternatively, appoint a special “consolidation arbitrator” for the sole purpose of determining the consolidation request.  In these circumstances, the arbitrator may decide to consolidate the proceedings against the wishes of one of the parties, taking into consideration the terms and compatibility with the arbitration agreement, applicable law, considerations of timeliness, and the interests of justice and efficiency.  To avoid conflicting decisions, the decision of the arbitrator chosen by the AAA governs.  Second, parties may also request joinder of additional parties to an ongoing arbitration.  If an existing party or the proposed new party does not agree, the arbitrator shall decide the joinder request under the applicable law.  Finally, the rules now provide an arbitrator chosen by the AAA with broad powers to administer any consolidation or joinder by explicitly granting the arbitrator the authority to determine whether any other previously-appointed arbitrator will remain on the newly consolidated case or a case with newly joined parties, and any process for selecting arbitrators to fill vacancies, if any.

Confidentiality  

The new amendments require the AAA and the arbitrator(s) to keep all matters relating to an arbitration or award confidential, unless otherwise required by applicable law, court order, or party agreement.  The AAA rules still do not place any confidentiality obligation on the parties, contrary to the assumption of many users that arbitration proceedings are confidential.  As before, however, the arbitrator may issue any necessary confidentiality order. 

New and updated rules for improved efficiency

• Increased efficiency for expedited arbitrations.  Absent a showing of good cause and arbitrator permission, the rules for expedited arbitrations no longer permit motion practice or discovery other than a basic exchange of exhibits, and parties to an expedited arbitration no longer may apply to the AAA for appointment of an emergency arbitrator.  These changes are designed to streamline expedited arbitrations.
• New requirements for allowing dispositive motions.  As before, the arbitrator may allow the filing of and make rulings upon a dispositive motion.  When deciding a party’s request to file such a motion, the arbitrator is now required to consider the time and cost associated with the briefing of a dispositive motion, including an assessment of fees, expenses, and arbitrator compensation.  These requirements are designed to limit dispositive motions that, if granted, would not increase the efficiency of the proceedings.
• “Interpretation” of the Award.  The new amendments allow parties to request that the arbitrator “interpret the award.”  In doing so, the arbitrator is not empowered to re-determine the merits of any issue but may clarify their ruling.  This newly updated provision prevents the parties from having to endure a second arbitration to resolve an ambiguity in an award, though time will tell whether this provision will be abused by parties attempting to reopen the merits.  As before, parties may also request modification of the award for any clerical, typographical, or computational errors.
• Alignment with advancements in technology.  The new rules include revisions that reflect advancements in meeting technology.  For example, the rules now explicitly state that parties may use a video conference to conduct a preliminary hearing.  The arbitrator now has the authority to set the method of hearing, including to use video, audio or other electronic means when appropriate.
• Increased attention to cybersecurity.  The new amendments update the AAA’s checklist for initial procedural conferences to recommend that the arbitrator and parties discuss any issues related to cybersecurity, privacy, and data protection.  This is aligned with common practice and the recommendations of the 2022 edition of the ICCA-NYC Bar-CPR Protocol on Cybersecurity in International Arbitration.

In sum, these amendments more closely align the AAA’s Commercial Arbitration Rules with the rules of other global arbitral institutions, and make the Commercial Arbitration Rules a more attractive option for resolving business-to-business disputes in arbitration.  If you have any questions with respect to the AAA’s Commercial Arbitration Rules or these amendments, please do not hesitate to contact the authors of this note.