Efficient Arbitration Part VII: Do You Need a Transcript?
We have been considering different ways to reduce the cost of arbitration. Let’s now consider the cost of a transcript. No rule requires a stenographer at an arbitration hearing, although that is typically allowed. See, e.g. AAA Commercial Rule 28. But should you spend the money on a transcript for your next arbitration? Like everything else, it depends on your case.
Reasons in favor of a transcript
There are many positives to a transcript. It provides a record of the proceedings. If there is post-hearing briefing, you have a very concrete way to refer to favorable testimony at the hearing in your brief. This also provides a source for the parties and arbitrators to go to refresh their memories of exactly what the testimony was. During a long arbitration with many witnesses this can be most helpful.
If you are considering a possible motion to vacate or modify the Award, you usually have to have a transcript or there will be very little for a court to review. To prove up a ground for changing or vacating the Award, you will need to first show what happened. You might be able to do that with affidavits and exhibits in the right case. But few courts are going to be very interested in reconstructing what happened at the hearing, particularly when the parties disagree on what actually happened.
But is it really that helpful?
The biggest negative, of course, is expense, suggesting further thought about whether a transcript is really that valuable. In commercial arbitrations, the issues very often turn on the interpretation of legal documents. Those will be in evidence. With the advent of email, often the important events are part of the written record. Instead of picking up the phone, folks tend to dash off emails which will be exhibits at the hearing.
Arbitrators generally take good notes. With those notes and the documents in evidence, it is often unnecessary to have a record of exactly what the witnesses said at the hearing.
Where the hearing is concluded with closing statements and the record is then closed, with no post-hearing briefing, a transcript is basic superfluous. But for a longer hearing with post-trial briefing, it is at least comforting to have a transcript of the actual testimony so it can be checked verbatim against notes. But unless the hearing is likely to turn mostly on the testimony itself and not the writings – which is somewhat rare – a transcript is often not really necessary.
As noted, a transcript could be a prerequisite to a successful attempt to vacate or modify the award. But given the standard of review, vacation or modification by a court is unlikely. Generally, under the Federal Arbitration Act, which governs most commercial arbitrations, the award can be vacated only for things such as fraud, corruption, evident partiality of the arbitrators, failing to postpone the hearing on good cause shown, refusing to hear pertinent evidence, or failing to make a final, definite award. See 9 U.S.C. § 10. There are some possible non-statutory grounds for vacating awards, but they are in doubt after recent Supreme Court cases. For a good summary of the law on all this, go to the ABA summary at:
http://apps.americanbar.org/litigation/committees/construction/articles/spring2014-0514-advising-clients.html
The grounds for modification are limited to things such as evident miscalculation or description, or awarding on matters not submitted. 9 U.S.C. §11.
As you can see, some of these grounds might be apparent from a transcript, but many will not be. And if your real concern is a mistake of law or mistake on factual findings, the transcript will not help you much unless you have included an arbitral appeal provision in your arbitration clause. Otherwise, those are not ground for vacating or modifying the award. This will all go into your consideration of whether a transcript is a good investment.
The analysis
So should you hire a stenographer for your next arbitration hearing? That will depend on how much is at stake, how critical you think actual testimony is – as opposed to documents – and what you think the likely grounds might be for attacking the award or on which the other side might seek to attack it. In many smaller matters, you will likely forego a transcript. But that may even be true for large matters. After all, your client probably chose arbitration to get a final, binding decision quickly and relatively inexpensively without post arbitration litigation about the Award.
Of course, if you have decided to build in an arbitral appeal, you will probably need a transcript.
Procedures and disputes
You may not need to decide at the beginning of your arbitration whether or not to have a reporter at the hearing. This is usually addressed at the scheduling conference, but most arbitrators will let you make a final decision about a transcript just before the hearing.
Don’t wait too long to decide, though. You need to notify your opponent and the arbitrator three days before the hearing if you decide to have a transcribed record. AAA Commercial Rule 28. It is up to you to make arrangements with the stenographer. Id. The party ordering the transcript is responsible for paying for it. Id.
What if you want a transcript and your opponent doesn’t? Then you order it and pay for it. Id. Can your opponent get a copy without paying for it? No. But, if the arbitrator declares the transcript the official record of the proceedings – which he or she almost always will – then the other party can “inspect” the transcript for free at a date, time and place to be determined by the arbitrator. Id. You will have to give the arbitrator a copy. Id. The arbitrator is to decide any disputes as to costs regarding the record. Id.
Generally, disputes about transcripts are rare. If one party is determined to have it, the other party usually decides they should have it too and agrees to split the cost. But you will still want to give this some careful thought in your quest to make arbitration as inexpensive as possible, but with due regard for effective advocacy.