CPR Rules

CPR Launches New Administered Employment Arbitration Rules and Updates Its Employment-Related Mass Claims Protocol

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The International Institute for Conflict Prevention & Resolution (CPR) has launched its first set of Administered Employment Arbitration Rules and updated its Employment-Related Mass Claims Protocol. 

The just-released 2021 Administered Employment Arbitration Rules (Employment Rules) incorporate many innovations from CPR’s 2019 Administered Arbitration Rules, and reflect the collaboration of counsel from the plaintiff’s bar, in-house employment counsel, corporate defense attorneys, and neutrals who contributed to their creation. 

CPR recognizes that employment disputes and employment arbitration programs differ from commercial arbitration in important ways. Among other things, employment arbitration agreements, programs, and procedures must ensure that the interests of individual workers, who as a practical matter often do not negotiate their terms, are adequately protected.

The new CPR Employment Rules give significant attention to due process concerns (described in more detail below), which are vital for individuals subject to mandatory arbitration programs.  These rules are an especially welcome contribution to the field, given the increasing frequency with which employment-related disputes are being arbitrated. (Alexander J.S. Colvin, “The growing use of mandatory arbitration,” Economic Policy Institute (April 6, 2018) (noting that 53.9 percent of nonunion private-sector employers now have mandatory employment arbitration procedures, and that percentage climbs to 65.1 percent among companies with 1,000 or more employees).

The following are some of the distinguishing features of the newly launched CPR Employment Rules:

  • Rule 1.4 (Due Process Protections):  Demonstrating the fundamental importance that CPR places on fairness to all parties, including in particular employees and individuals who may be subject to mandatory arbitration programs, CPR incorporates its Due Process Protections directly in the Rules at their outset. The provision is detailed, providing employers better guidance on when and how CPR will apply the due process requirements.
  • Rules 3.12-3.13 (joinder and consolidation, respectively): CPR has created an innovative procedure that uses an Administrative Arbitrator to address issues of joinder and consolidation when they arise prior to selection of an arbitrator, identifies factors to be considered, and makes clear that neither joinder nor consolidation is permitted if prohibited by the applicable arbitration agreement.
  • Rules 5-6 (selection of arbitrator): CPR’s Employment Rules provide for arbitration by a single arbitrator selected by the parties from a list using striking and ranking as the default procedure (like other employment arbitration providers); however, CPR’s Employment Rules also offer parties a variety of other options for arbitrator selection should they wish to innovate in this area, including allowing parties to propose arbitrators to be included on the slates for nomination or to use CPR’s unique screened selection process for three-arbitrator tribunals.
  • Rule 12.2(c) (hearings): Given the experiences gained during the Covid-19 pandemic, CPR’s Employment Rules make clear that an arbitrator may order remote hearings and provide factors to be considered in making this determination.
  • Rule 14 (emergency measures by emergency arbitrator): Clarifying a matter than can be ambiguous under other providers’ rules, CPR’s Employment Rules provide that their emergency procedures will apply automatically unless parties expressly agree they do not; at the same time, the emergency procedures are not exclusive, and parties still have the choice of going to court for emergency relief.
  • Rules 17 and 18 (administrative and arbitrator fees): CPR’s Employment Rules, consistent with most state law and with the Due Process Protections, provide that employers are generally required to pay arbitration fees but that the arbitrator has authority in appropriate cases to shift fees to the same extent a court would be able to do so. In addition, to address a matter that has become more commonly litigated, CPR’s Employment Rules set out detailed guidance to address cases where a party has refused to pay required fees to provide clarity on preserving the rights of the non-defaulting party.
  • Rule 20 (confidentiality): CPR’s Employment Rules provide that CPR and the arbitrator must maintain confidentiality. But, consistent with developing case law, these rules do not impose confidentiality by rule upon the parties. The arbitrator has the same authority as a court to issue confidentiality orders to protect evidence/discovery.
  • CPR’s Employment Rules are specifically designed to avoid ambiguity and disputes over the interpretation of the rules.

The fee structure for the administration under the Employment Rules can be found HERE.

CPR also is updating the Employment-Related Mass Claims Protocol (ERMCP), which it first launched in November of 2019.  The Protocol provides an innovative mechanism for the more efficient and effective resolution of a mass of employment-related cases.  The ERMCP now incorporates CPR’s newly launched Employment Rules as the default rules that will govern arbitrations under the Protocol.

In addition, and in an effort to provide better clarity around the procedures under the Protocol, and with the guidance from a task force of leading counsel from the plaintiff’s bar, in-house employment counsel, corporate defense attorneys, and neutrals, the updated ERMCP also:

  • clarifies the documents that need to be filed to commence the arbitrations;
  • clarifies certain timelines for triggering events, including payment deadlines;
  • specifies the kinds of grounds for challenging an arbitrator’s independence or impartiality (such as provided in the Employment Rules);
  • defines basic terms to avoid ambiguity, such as “Commencement Date,” the “Employment Mass Claims Panel,” the “CPR Panel of Distinguished Neutrals,” and a “Final Written Reasoned Award;”
  • provides greater details for how the Mediation Process will work;
  • expands the role of the Administrative Arbitrator to assist the parties in expediting the proceedings and reaching a resolution;
  • reinforces the option of the parties to resolve their cases at any point in time even apart from the Mediation Process; and
  • clarifies the authority of the arbitrator to order a remote proceeding so long as taking measures to ensure the remote proceedings remain fair.

Please also see the FAQs accompanying this revised version.

To make administration of the Protocol more cost-effective, the fee structure for the Protocol has also been modified based on efficiencies that can be achieved.  CPR still requests that any party contemplating inclusion of the Protocol in its dispute resolution program discuss the Initiation Fee with CPR both to scope out the size of any matter and to ensure there is compliance with CPR’s Due Process Protections and other guidance.

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Membership Minute: A Treasure Trove of ADR Resources

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This posting is the second in an ongoing series written by Niki Borofsky, Vice President of Membership, focusing on CPR Members and ways to make the most of CPR Member Benefits.

For 40 years, CPR has been bringing together in-house counsel, outside attorneys, academics and neutrals to think creatively and forge new tools, better rules, and improved processes – all with the goal of making dispute resolution more cost effective, more efficient, and better for business in the long run.

As an independent, not-for-profit think tank and dispute resolution services provider, we have the unique ability to convene all stakeholders and pick the brains of experts from every perspective.

CPR’s corporate members bring the practical in-the-trenches advice on how they use ADR, law firm advocates speak from decades of practice in multiple jurisdictions, our neutrals illuminate what is integral to their decision-making processes, and academics inject research and theory into the equation. The result is a collection of products that have been vetted, approved and road tested by businesses and top practitioners.

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A Menu of Options for All Levels of Expertise

The fruits of CPR’s committees’ labors are available to members through our website. The first step is to register for our website (if you have not already done so). Once you are registered and logged in as a member, these time and money-saving tools are all at your disposal free of charge, so be sure to bookmark our Resource Center on your browser.

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Start with the basics.

Even if you are a master of dispute resolution yourself, there are likely other teams or lawyers in your organization who may benefit from learning the ropes. CPR’s resources can help you to bridge the gap and give you an excellent platform to share how important careful dispute resolution clause drafting is to sustaining a business relationship through difficult times. Having thoughtful contractual dispute resolution mechanisms in place is key should conflict arises, and these choices are made when drafting.

Hone in on industry-specific learning.

The classic lawyerly response to even the most straightforward question is often – “It depends.” And rightly so, different parties and diverging matters require special consideration. Thankfully, CPR has had the time, expertise and focus to explore a variety of ADR solutions that are tailored to particular industry challenges and constraints.

Resort to the Rules.

For corporations and practitioners, one of the most concrete and powerful resources CPR has to offer (not just to members, but to all parties) is the 2014 Rules for Administered Arbitration of International Disputes. These rules benefit from CPR’s emblematic multi-stakeholder engagement, and as a result encompass best practices and are streamlined, high-quality and cost effective.

Of course, the best wat to familiarize yourself with the Rules is by reading them, skimming their Key Features, and flipping through the Frequently Asked Questions. To whet your appetite, here are a few of the most talked-about features:

  • Screened Selection Process (Rule 5.4), which enables parties to appoint arbitrators without them knowing who chose them (winner of the 2016 GAR Innovation Award)
  • Default reasoned award requirement (Rule 15.2), enhancing enforceability and discouraging unprincipled “baby-splitting”

Parties also like to know that administration of all CPR cases is handled by qualified attorneys with multilingual skills (our staff speaks French, Portuguese and Spanish).

CPR has a lot to offer, and we are always happy to help guide you through our ADR resources – including scheduling a webinar or presentation for your organization on any of our rules, tools or services.

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Niki Borofsky can be reached at nborofsky@cpradr.org or 646.753.8225. 

Y-ADR Mock Procedural Hearing under CPR Rules for Administered Arbitration of International Disputes – An Overview

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By Ksenia Koriukalova

On September 8, 2016 CPR’s Young Attorneys in Dispute Resolution (“Y-ADR”) held the Mock Procedural Hearing under the CPR Rules for Administered Arbitration of International Disputes at the offices of Williams & Connolly LLP in Washington, DC.

The mock case involved a multi-million-Euro energy dispute between business parties from both sides of the Atlantic. Vento, a French energy business company, and Vento España, its wholly-owned Spanish subsidiary operating a windmill plant, initiated arbitration against Wind Corporation, a windmill manufacturer based in Chicago, Illinois. The claim arose out of the purchase by Vento España of 25 windmills produced by Wind Corporation, at the price of €1 million per unit, with the right of first refusal with respect to 25 additional units to be produced by the manufacturer following the execution of the contract. Claimants alleged that Respondent breached the right of first refusal provision by selling windmills to a different buyer.

In late June 2016, Claimants filed their notice of arbitration based on the arbitration clause found in Vento España’s contract with Respondent, which called for arbitration under the CPR Rules for Administered Arbitration of International Disputes (CPR Rules). One month later, Respondent submitted its notice of defense and counterclaim objecting to the tribunal’s jurisdiction on the grounds that one of the Claimants, Vento, did not sign the contract containing the relevant arbitration clause.

Meanwhile, three arbitrators were appointed to hear the case on August 1, 2016. Two of the arbitrators were appointed pursuant to CPR’s screened selection process provided in Rule 5.4 of the CPR Rules. Under this selection process, two out of three arbitrators are designated by the parties without them knowing which party designated each of them. It is worth noting that CPR’s unique Screened Selection Process was the winner of the 2016 Global Arbitration Review (GAR) Innovation Award.

Pursuant to Rule 9.3 of the CPR Rules, the arbitrators scheduled the initial pre-hearing conference promptly after their appointment to discuss the procedural issues of the case. The Y-ADR event simulated this pre-hearing procedural hearing before the tribunal composed of Dana MacGrath (Sidley Austin LLP), Patrick Norton (Law Offices of Patrick M. Norton), and Allan B. Moore (Covington & Burling LLP). David L. Earnest of Shearman & Sterling LLP, C.J. Mahoney of Williams & Connolly LLP, Mallory B. Silberman of Arnold & Porter LLP, and Laura J. Stipanowic of Smith, Currie & Hancock LLP played the roles of party representatives and counsel.

The first issue argued before the tribunal was whether the question of the tribunal’s jurisdiction should be considered separately leading to bi- or even trifurcation of the arbitral proceedings. Respondent stated that because one of the Claimants, Vento, was not a signatory of the contract containing the relevant arbitration clause, the tribunal had no jurisdiction over its claims. In support of its argument on separate consideration of the question of jurisdiction over the non-signatory, counsel for Respondent referred to Guideline 2 of the CPR Guidelines on Early Disposition of Issues in Arbitration, which lists jurisdiction and standing as issues for which early disposition may be appropriate. The tribunal ruled against separate consideration of Respondent’s jurisdictional objections, primarily due to the tight time-frame of the arbitration. According to the arbitration clause, the arbitrators had to conduct an oral hearing on the merits within six months and render the award within nine months of its constitution. Another reason for denying the request for bi- or trifurcation were potential overlaps between the facts of the case relevant for deciding both on Respondent’s jurisdictional objections and on the merits of the dispute.

Next, the parties and the tribunal discussed the necessary length of the merits hearing and the dates suitable for all expected participants. This task appeared to be not an easy one because of the parties’ different positions on the optimal hearing length, other commitments of the chair of the tribunal, and the approaching holiday season.

The third issue the arbitrators had to decide was the number, sequence and content of written submissions, as well as the timing and scope of the disclosure. Claimants, European companies, insisted on limited document exchange and referred to the CPR Protocol on Disclosure of Documents and Presentation of Witnesses in Commercial Arbitration to support their position. Respondent, a U.S. corporation, sought broad discovery and depositions, and argued that they were possible under the CPR Protocol if allowed by the tribunal or agreed upon by the parties. Claimants and Respondent also had different views on the number and content of submissions. The arbitrators ordered to have two rounds of simultaneous pre-hearing submissions, with the first round containing full positions of each party supported by evidence, and the second one being the response to the opposing party’s brief. The tribunal also decided that the discovery process with the use of the Redfern schedule should take place before the first round of written submissions. Respondent’s request for depositions was denied.

At the end of the procedural hearing, the chair of the tribunal asked the parties to consider settlement negotiations, and draw their attention to relevant Rules 9.3(e) and 21 of the CPR Rules.  Rule 9.3(2) of the CPR Rules expressly provides the possibility for the parties to engage in settlement negotiations, with or without the assistance of a mediator, as one of the matters to be discussed during the pre-hearing conference. Counsel and their clients discussed the possibility but, ultimately, there was no agreement between the parties to engage in mediation.

The mock pre-hearing conference provided a realistic picture of how various procedural issues are discussed and determined at an early stage of arbitral proceedings. It also demonstrates how CPR Rules and other tools available to the parties in CPR arbitrations are used in practice. Well-prepared party representatives and arbitrators made the proceedings very dynamic and interesting to observe. The recording of the hearing is available to CPR members (who are logged into the website) HERE.

Ksenia Koriukalova is a CPR Fall intern