08 August 2018

AAA new alternative fee arrangements helps control arbitration costs

Arbitrators offer two new routes to resolve disputes at lower costs, cites high levels of satisfaction among general counsel.

In a first-of-its-kind offering for parties in alternative dispute resolution, the American Arbitration Association (AAA) has made a commitment to adding cost savings, fee transparency and predictability to the arbitral process.

Choice of options

The American Arbitration Association (AAA) has introduced an alternative fee arrangement (AFA) option on eligible cases offering to help resolve B2B disputes through arbitration. The AAA’s AFA program for parties pursuing arbitration is the first of its kind to be offered by a national provider of alternative dispute resolution (ADR) services.  Parties can choose from the following two AFA options prior to the appointment of an arbitrator. The first option is a fixed fee arrangement, whereby an AAA arbitration panel member proposes a fixed fee for the pre-hearing, hearing, and post-hearing phases of arbitration which must be approved by all parties. The second option is a capped fee arrangement, whereby an AAA arbitration panel member proposes a fee cap for the entire arbitral process which must be approved by all parties. India Johnson, president and ceo of the AAA-ICDR (international centre for dispute resolution), says “alternative fee arrangements align with our mission to add cost savings and fee transparency and predictability to the arbitral process; the AAA and its Roster of Arbitrators are proud to be the first arbitral institution to offer an AFA option to parties and counsel seeking to resolve their disputes through arbitration.’

General counsel highly satisfied

The AAA-ICDR says the AFA program is in line with industry trends, given that the popularity of AFAs continues to grow among corporate counsel. According to the 2017 Litigation Trends Annual Survey compiled by Norton Rose Fulbright, 96 per cent of corporate counsel in the US and other countries were satisfied with the quality of work provided under AFAs, and more than a third of the 318 survey participants stated they expect to increase their use of AFAs in 2018. The not-for-profit American Arbitration Association (AAA) has administered approximately 4.1 million alternative dispute resolution (ADR) cases since its founding, and has 26 offices in the United States, in addition to Mexico, Singapore, and Bahrain.