This article has been written by Adil Rashid Bhat, pursuing Diploma in Corporate Litigation and has been edited by Oishika Banerji (Team Lawsikho).
This article has been published by Sneha Mahawar.
Table of Contents
Introduction
American Arbitration Association also referred to as AAA or Association is a private Not for Profit Association (NPO) with a mission to provide, arrange and give judgments on awards. It also facilitates mediation through alternative redressal of disputes arising out of common commercial contracts, breaches, business agreements, employee agreements, etc, whose award is binding on parties to the dispute. Association provides its services to interested individuals and Associations or businesses who are interested in amicable settlement of their disputes outside the courtroom. This article provides a discussion surrounding the American Arbitration Association for its readers to understand.
Background of the American Arbitration Association
- Association was established in 1926 by the merger of the Arbitration Society Of America and the Arbitration Foundation under the Federal Arbitration Act with its headquarters in New York and has offices throughout the United States of America.
- American Arbitration Association also started its International Centre for Dispute Resolution in 1996 to provide its services outside the United States as a global component in about more than eighty countries for which Association has recruited and trained its staff in more than twelve globally recognized languages.
- The association is providing the solution to the parties in a time-bound manner which is usually within a maximum period of 288 days from the filing of the arbitration application till the disposal of arbitration matters or till the mediation is carried on between the parties and matters settled amicably.
Aim of the Association
The aim of the Association is to provide cost-effective solutions to businesses and also to save businesses. It is also believed that 63% of the matters filed for arbitration come to end up with a solution without going through the entire process of arbitration and besides about 40% of filed matters settled down without paying any compensation to the arbitrator. The nominal fee payable for initiation of arbitration or mediation process and settlement fee is given on the website of the Association which is www.adr.org which can be accessed by any party wishing to file an application form for arbitration and can have a clear idea about the expenses and costs of the arbitration process.
Mission of American Arbitration Association
Three P’s (Public, Process, Party)
The Association is a private body and the world’s largest alternative dispute resolution provider besides being an NPO has vast responsibility. Hence has put three P’s on motion, namely, Public, Process and Parties. The Association provides financial assistance to people affected by national disasters, educating people about disputes and how to not involve themselves in the disputes by having good knowledge and also by providing fast, effective, fair and timely solutions to disputes arising out of contracts, etc.
Three E’s (Ethics, Efficiency, Experience)
The Association helps businesses to get back to business after providing solutions through arbitration and mediation under transparent, fair and cost-effective services and through a huge number of arbitrators by the mutual choice of the parties within a prescribed time limit wherein it has been seen that 63% of the matters filed for arbitration comes to end up with a solution without going through the entire process of arbitration and besides it is also believed that about 40% of filed matters settled down without paying any compensation to the arbitrator, this way Association following ethical practice and with the experience and efficiency of the arbitrators and mediators who are mostly retired judges, leaders of legal or business communities and the disputes are solved without the involvement of courts and by saving time and money also.
Reducing the burden of courts
The Association by providing cost-effective resolution to disputes through alternative means under a fair, impartial and transparent environment is reducing the burden of courts throughout the globe and also saving money and time of the parties and helping them to go back to business as earliest as possible besides helping them to keep their sensitive information within their domains.
How does the American Arbitration Association work
Case filing and invitation
The Association has framed its procedure to file the case to them for which either of the parties interested in arbitration through the Association to resolve the dispute shall file an application form duly prescribed by the Association demanding arbitration.
Along with this, a copy of the agreement or contract having a provision for arbitration through AAA or through mutual decision along with the application fee in the case the name of the Association is not already mentioned in the contract needs to be provided.
The Association after receiving acknowledgment from all the necessary parties to the dispute sets a deadline for filing of the response from the parties to the dispute. This filing of an application for want of arbitration along with the initial application fee dependents upon the Claim amount in the arbitration application. which is initially payable as 925 USD up to a claim amount of 75000 USD, claim amount is payable by the party who files in the claim application or the party who files the counterclaim, all this process is done within a time span of 1-15 days.
Selection of arbitrator
Once the parties have shown their response to the application and interest in initiation of arbitration proceedings, parties also demand what should be the qualifications of an arbitrator appointed by the Association who is selected by the Association from the National Roster of Arbitrators and provides their resume to the parties to obtain their consent, in the case either of the party is not willing to give its consent for the appointment of arbitrator prescribed by the Association, a deadline is fixed by the Association to the parties to mention its preferences from the list itself, all this process is undertaken between 15th to 44th day.
Preliminary hearing starts
Once the arbitrator is selected and has been assigned the case, preliminary hearings start which is the 3rd phase of the process carried out by the Association, In this, the arbitrator and the parties to the dispute discuss the matter and exchange information. They also provide a list of witnesses, dates, etc., and carry this out through a conference call where sharing of information and other things acts as a roadmap to the parties and allows them to prepare the case and this process can take between 44th to 85th day.
Exchange of information and preparation of case presentation
The 4th step of the process is carried out between the 85th to 222nd day during which information is shared between the parties and the case is presented by all the parties before the arbitrator. The arbitrator also makes sure that the necessary information is shared properly as per need and requirement between the parties, all this process happens in private without exposing the sensitive information of businesses to any other third party.
Mediation or amicable settlement of the issue
In case the claim or counterclaim amount exceeds $75000, the arbitrator assists the parties to reach out any settlement through mediation as per the rules without paying any further fee.
Hearing of testimony
Proper hearing of the dispute before the arbitrator takes place between the 222nd day to 223rd day wherein parties produce and exhibit their evidence and testimonials.
Submissions to the arbitrator after the case hearing
Parties to the dispute may be allowed to produce further evidence or documents in support of their claims and counterclaims, all these exercises can be done with prior approval of the arbitrator and all the submissions can be done between the 223rd to 258th day from the date of application for arbitration.
The award is passed by the arbitrator
Once the arbitrator closes the evidence put on record by the parties, the arbitrator issues a decision within a period of 30 days herein referred to as an Award which is binding upon the parties and hence the arbitration proceedings are completed within a period of 288 days from the date of application for alternative disputes resolution and the businesses can be back to their business.
CSR (Corporate Social Responsibility)
Under Corporate Social Responsibility, the Association being a neutral Association in nature and a non for profit Association is providing disaster relief programs in collaboration with Governments and States. It also helps in settling the claims by its expert guiding measures and guides states to overcome the havoc caused due to natural disasters. The Association has a well-defined disaster relief module under which the Association is fulfilling its responsibility.
Conclusion
As we are near the end, what can be understood from what has been discussed above is that the Association started its journey some 96 years back and has done a tremendous job throughout its entire life span by reducing the burden of the courts through its alternate dispute resolution options in different fields of businesses. The Association has also succeeded in expanding its services in and around 80 countries which eases the overall burden of courts and also benefits businesses, employee organisations and states. The Association has resorted to alternate resolutions to solve the hardships and disputes faced by businesses which have expanded its scope throughout the world and benefitted millions of people till date and has contributed towards the betterment of economic situations throughout the globe.
References
- https://www.adr.org/.
- https://www.adr.org/sites/default/files/document_repository/AAA%20Government%20Services.pdf
- https://www.adr.org/DisasterReliefPrograms
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