Writing the Rules of Your Next Arbitration – Part Two
Some Surprises You’ll Find Inside the Most Common Rules
Part Two of Four (read Part One here)
Some of the ramifications of a provision calling for arbitration with, for example, the AAA or under AAA procedural rules might surprise people. For instance, even when parties only agree to arbitrate under AAA rules, they also agree—by virtue of those rules—that the AAA will administer the arbitration (and charge its standard administration fees, which can be significant). By agreeing to arbitrate under AAA commercial arbitration rules, the parties also agree that:
• The arbitrator shall have the power to rule on his or her own jurisdiction, including objections regarding the existence, scope, or validity of the arbitration agreement or the arbitrability of any claim or counterclaim.
• The parties will select their arbitrator(s) from a list of AAA-approved arbitrators selected by the AAA. If they cannot agree or take too long, the AAA will select the arbitrator(s).
• If there are two or more claimants or respondents, the AAA will select the arbitrator(s).
• The dispute will be heard by one arbitrator for claims of under $1 million and three for claims of $1 million or more. But even in one-arbitrator cases, the AAA has discretion to direct the appointment of three arbitrators in AAA-administered cases.
• The AAA, not a court, decides whether an arbitrator should be disqualified—for example, for lack of partiality or independence. Moreover, once the AAA decides, the issue of disqualification arguably has been arbitrated; thus, it would not be subject not to a de novo review by the courts but rather to the more deferential review afforded arbitrator awards generally.
• There is no right to move for summary judgment—it is up to the arbitrator whether to allow it. 
• There are no rules of evidence.
• The arbitrator decides how to allocate expenses, including arbitrator fees—even in the absence of a fee-shifting provision in the parties’ contract. 
JAMS rules address most of these same issues, but not always in the same way. The Federal Arbitration Act (“FAA”) and the Uniform Arbitration Act (“UAA”), as well as the substantial body of case law that has developed around then, also address some but not all of these issues. The parties can determine any of these matters specifically by agreement if they so choose, but most don’t.
 “When parties agree to arbitrate under these rules, or when they provide for arbitration by the AAA and an arbitration is initiated under these rules, they thereby authorize the AAA to administer the arbitration.” AAA Commercial Arbitration Rules, Rule R-2.
 “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.” Id., Rule R-7(a).
 Rule R-16(a) provides for one arbitrator unless the AAA decides otherwise. However, the Procedures for Large, Complex Commercial Disputes, which apply to cases involving claims of $500,000 or more, provide for three arbitrators in cases involving claims of $1 million or more. Rule L-2(a).