With the three-day weekend, there were not a lot of interesting decisions last week, so today provides an opportunity to look at some interesting literature and sidelights.

Artificial Intelligence and Arbitration

On the New York Times’ Daily podcast, The Interview, Ted Sarandos, the co-CEO of Netflix, said last week, in essence, that AI will not put creators out of business.  “AI is not going to take your job.  The person who uses AI well might take your job.”  The same may be said of ADR – AI will not make arbitrators and mediators obsolete, but it will obsolete those who do not understand it.

In that vein, I recommend reading Guidelines on the Use of Artificial Intelligence in Arbitration, published by the Silicon Valley Arbitration & Mediation Center, available at https://svamc.org/svamc-publishes-guidelines-on-the-use-of-artificial-intelligence-in-arbitration/. The protocol, which was developed by a task force over a period of about a year, provides seven general guidelines for the application of AI in arbitrations, along with thoughtful commentary for each section.  Some of those recommendations may be controversial, such as the specific statement in Guideline 3 that there is no per se obligation to disclose the use of AI in arbitration.  The Commentary, however, does “acknowledge[] the possibility that disclosure of the use of AI may be appropriate in some circumstances.”  As arbitrators and arbitration counsel, we will need to ponder those “circumstances.” Guideline 5, which covers the integrity of evidence, must be at the forefront of any arbitrator’s awareness (and counsel’s wariness) as “deep fakes” become a greater risk. Guideline 6 makes it clear that the “arbitrator’s mandate, especially their ultimate decision-making function, is personal and non-delegable,” but allows for the use of AI to “analyse [sic] the facts, arguments, evidence, and the law, and to issue a reasoned decision.”

Use of AI should be an item on the checklist for the parties’ first prehearing conference with the tribunal. The Guidelines provide a model clause for their inclusion in Procedural Orders.  In addition, the Guidelines, while not yet specifically incorporated by other arbitral institutions, seem to be getting acceptance elsewhere.  For example, the AAA has included a reference to them on its website, and they do not seem to be inconsistent with the Association’s more general guidelines which were issued in November, 2023, see Principles Supporting the Use of AI in Alternative Dispute Resolution, https://go.adr.org/rs/294-SFS-516/images/Principles%20Supporting%20the%20Use%20of%20AI%20in%20Alternative%20Dispute%20Resolution.pdf. JAMS has gone even further and adopted a set of rules covering Artificial Intelligence disputes, see https://www.jamsadr.com/rules-clauses/artificial-intelligence-disputes-clause-and-rules.

During COVID, we all adjusted to on-line ADR and the profession has learned to adapt to virtual arbitrations and mediations, with their strengths and weaknesses.  AI will be the next opportunity (or challenge) to continue the goal of resolving disputes more efficiently.  “OK, Boomer” will be an unacceptable response.  For those of you who have read this far, I’d like to extend an invitation to continue this discussion.  If you’re interested in some regular (maybe monthly) Zoom (yep, that was inevitable) brown bag to talk about the literature, cases that we’re seeing, or developments in the field, please email me at dreif@reifadr.com, and we can set something up.

Court-annexed ADR

Jordan Hicks, who is or was a student at Washington & Lee University School of Law, has written a spectacular note on court-annexed ADR programs, Student Note Colloquium: Judicial-ish Efficiency: An Analysis of Alternative Dispute Resolution Programs in Delaware Superior Court, 81 Wash. & Lee L. Rev. 321 (Winter, 2024), available at STUDENT NOTE COLLOQUIUM: Judicial-ish Efficiency: An Analysis of Alternative Dispute Resolution Programs in Delaware Superior Court, 81 Wash & Lee L. Rev. 321 (lexis.com)  As states adopt or review their own forms of mandatory or voluntary ADR programs, the inevitable question arises as to what type of program will be most “effective.”  However, there is scant data to test those programs.  Hicks recognized that, over the course of the years, Delaware Superior Courts adopted three different schemes.  In a deep data dive using the Annual Report of Statistical Information for the Delaware Judiciary, he analyzes and charts on a case-by-case basis the effectiveness of those programs in disposing of the case at arbitration, the demand for a de novo trial, and the time to ultimate disposition of the case.  He also measures each program against three benchmarks: speediness of resolution, judicial efficiency, and “prejudicial concerns.”  Hicks concludes that in implementing ADR programs, rather than casting wide nets that aim to catch all cases, courts should “investigate what types of common disputes are well-suited to be solved through extrajudicial processes, solicit feedback and concerns form their local bars of attorneys, and draft narrow provisions that are well-suited to these goals.”  While those recommendations may sound obvious, Hicks’ work fleshes them out.  This is a must-read for anyone involved in court administration or annexed ADR .

Follow-up on Smith v. Spizzirri

On May 16^th, the Supreme Court decided Smith v. Spizzirri, 2024 U. S. LEXIS 2170 (May 16, 2024), holding that a stay, not a dismissal, is the appropriate remedy when a District Court grants an application to compel arbitration, see Federal Arbitration Act, § 3.   According to LEXIS, the case has been cited seven times by lower courts over the last two weeks.

One of those decisions is a warning to counsel who want a stay that they need to ask for it. In David v. Ally Financial, Inc., 2024 U.S. Dist. LEXIS 89155, *4, fn 4 (D.N.J. May 17, 2024), Chief Judge Bumb, after granting a motion to compel arbitration, dismisses the case because “neither party made a request for a stay pending arbitration.”   FAA Section 3 contains that requirement; the court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.” (Emphasis added).  Because of that last phrase in Section 3, we can look forward to more litigation over whether a party is “in default” of the obligation to arbitrate.  Expect more cases involving the non-payment of tribunal fees, the alleged failure to comply in good faith with prerequisites to arbitration under phased dispute resolution programs, and litigation or contractual waiver.

Another issue that counsel and lower courts will face is the appropriate remedy for dealing with cases which were dismissed before the decision in Spizzirri.  To what extent is the case retroactive to cover such now-improper dismissals?  Does the change in the law permit a reopening of the judgment of dismissal under Rule 60 of the Federal Rules of Civil Procedure?  Since counsel must make any such motion “no more than a year after entry of the judgment,” attorneys need to take a look at any such dismissals now in order to avoid the risk of their motion to reopen being time-barred. As always, action by SCOTUS means more work for lawyers and lower courts.

Have a good shortened week.  Even though Memorial Day itself is over, keep in mind those who gave their lives so that judges and courts are free to resolve the toughest issues of our times.

David Reif, FCIA
Reif ADR
Dreif@reifadr.com
Reifadr.com