Should arbitration transcripts be routine?

Proponents of arbitration have long touted the core values of arbitration: speed, efficiency and finality. As arbitration agreements have become increasingly widespread, many critics suggest that the lack of due process protections in arbitration result in unfairness, especially to the classic one-shot player – the consumer or employee. One way to ensure that parties receive due process, is to provide them a basis for challenging an arbitration award. While the standards for judicial review of arbitration awards are limited, they nevertheless permit a party to challenge the procedural regularity of the arbitral process and, in the majority of jurisdictions, challenge the award if the party believes that the arbitrator manifestly disregarded the law. While courts are skeptical of substantive challenges to arbitration awards, courts do overturn arbitration awards on substantive grounds. One of the obstacles to challenging an arbitration award is that arbitration hearings are not usually recorded or transcribed.

An appellate court in D.C. recently confronted the question whether arbitration hearings must be transcribed.

Dolton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., ___ A.2d ___ (2007) (No. 05-CV-1317) (http://www.lexisone.com/lx1/caselawsitemap/State-Courts-District-of-Columbia-100026-2007.html). In that securities arbitration case, the plaintiff stockholders challenged the arbitration award on the ground that the arbitration panel exceeded its powers and demonstrated partiality when it failed to make credibility findings. The court agreed that the arbitration panel should have made credibility findings because the dispute came down to the parties’ differing views of the facts – no other evidence was presented. Unfortunately, though , rather than transcribing the tape so that the appellate court could review the parties’ testimony, the plaintiff instead submitted a four-page affidavit describing the arbitration hearing testimony. The court stated that while transcripts of arbitration proceedings may not always be necessary for judicial review, here, the failure to produce a transcript was fatal to the plaintiff’s challenge to the arbitration award.

As this case demonstrates, the cost of producing a transcript is relatively low. It is simply the cost of transcribing an audiotape. Transcripts are valuable not only to a party challenging an arbitration award, but also to ensure the integrity of the arbitration process. If the Supreme Court finds that parties may agree to expand judicial review of arbitration awards in Hall St. Assocs. LLC v. Mattel, Inc. 196 F. App’x (9th Cir. 2006), cert. granted, 127 S.Ct. 2875 (May 29, 2007) (online merits brief at http://www.abanet.org/publiced/preview/briefs/nov07.shtml#hallstreet), the issue of transcripts is likely to become even more important. I think such a development would provide important support for the continued viability of the arbitration process.

 

Sarah Cole

2 thoughts on “Should arbitration transcripts be routine?”

  1. Mandating transcirpts may not be such a great idea as despite what is said in the case, they are expensive.

    One of the criticisms of arbitration is cost and formality.

    This is part of the trend into making arbitration and litigation almost indistinguishable.

    Will lawyers in arbitration play to the transcript in an attempt to set up the record for appeal. Will this expand the scope of appeal?

    Is this good?

    Is arbitration really an ADR process if this happens?

  2. I think that an audio recording should be mandated, and a challenging party to the arbitration award can then make a transcript should he choose.

    Review of an arbitration award is the most narrow in American jurisprudence. There’s no reason to make it any more narrow, or to allow arbitrators to get away with mischief.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.