Welcome to Our Dispute: Subpoenas and Summonses in Arbitration

The Federal Arbitration Act was enacted in 1925 to overcome the antipathy some judges had for private arbitration. Congress provided that an agreement to arbitrate would be as enforceable as any other contract.  Any state law saying otherwise is preempted by federal law.  Southland Corp. v. Keating, 465 U.S. 1, 16 (1984).   

One key aspect of the Act was to provide subpoena powers to arbitrators, analogous to those courts had.  Subpoenas are, after all, often necessary to allow a decision maker access to the facts needed to make informed decisions.  Sometimes only non-parties have those facts. 

But this is a somewhat curious state of affairs.  Arbitration agreements are private contracts.  And yet, federal law provides arbitrators – who are private decisionmakers appointed by the parties by contract – the power to involve parties who are strangers to that contract to provide information to be used in the dispute.  Still, if arbitration is to be recognized as a form of dispute resolution, subpoena powers may be required to make arbitration effective.  

Even more curious is this.  Although it has been more than one hundred years since the Federal Arbitration Act was enacted, courts still don’t agree on exactly what powers arbitrators have to subpoena documents or testimony.  It varies by circuit and even by court.  

The goal of this series of articles is to report on some of the differences between court’s approaches to arbitral subpoenas and suggest a practical approach to dealing with them.   

First things first 

But before we get into all that, let’s straighten out our vocabulary.  The statute that gives arbitrators the power to require non-parties to provide information allows an arbitrator to issue a “summons” to require people to provide information.   While it is “served in the same manner as subpoenas to appear and testify in court,” they are, therefore, more properly called “summonses” and not “subpoenas.”   So, lets call them summonses from now on.  

A practical approach to the arbitral summons 

Trust me when I say all of this can get legally complicated.  After all, the power to summons is limited, and parties need to eventually turn to courts to enforce arbitral summonses.  Arbitrators don’t have contempt powers, federal marshals, or jails.  Courts do.  So, already we begin to see the likelihood of legal complications and the possible requirement to go to court to enforce an arbitral summons.  But court is what parties to the arbitration agreements generally hope to avoid.  Court can be slow and expensive.  Arbitrations are supposed to be faster and cheaper.

This all leads to my thinking of a structured approach to arbitral summonses.  Before seeking or issuing an arbitration summons, I think we should ask these four questions: 

1.      Is the information requested necessary to allow a fair and informed decision?

2.      Does the arbitrator (or panel) have the power to issue the summons?

3.      Is the non-party likely to comply?

4.      What can we do to make compliance more likely? 

Let’s take them in order, starting with discovery. 

Allowing a fair and informed decision 

Parties generally agree to arbitrate to emphasize efficiency and lower costs.  The most expensive part of litigation is discovery.  Document demands, depositions, interrogatories, and requests for admission are routinely used to get the fact out in a case, but they are expensive.  Arbitrations tend to limit this process.  Document are usually exchanged at some point, depositions are usually limited, and other discovery methods are rarely used.   

Still, some form of “information exchange,” which is arbitration-speak for discovery, is necessary in most cases. Arbitration rules often require arbitrators to “manage any necessary exchange of information among the parties with a view to achieving an efficient and economical resolution of the dispute.”  See AAA Commercial Arbitration Rule 23(a).  And arbitrators are also to promote “equality of treatment and safeguarding each party’s opportunity to fairly present its claims and defenses.”  Id.   

That fair opportunity to present claims and defenses may require obtaining information from non-parties.   

But not all information a party would like to have is always necessary to fairly decide the case.  And there well may be more efficient ways to get the information.  Sometimes the party has the information already, the opposing party has it, or there is a cheaper and easier way to get it than demanding it from a non-party.  If so, there is no need to burden non-parties with looking for and producing it.   

I always require parties asking for an arbitral summons (though they usually call them “subpoenas”) to first show their proposed summons to their opposing party.  Occasionally, that results in an approach that can either obviate the need for the summons or reduce the scope of the summons.   

But the parties’ input may not be enough.  Arbitrators use arbitral summonses to require non-parties to participate in the dispute by providing information.  That is bound to be somewhat disruptive and expensive. And, ultimately, a federal court may be involved in the process.  This suggests that a competent arbitrator will independently consider the need for the information and minimize the disruption to the non-parties.  Maybe the facts aren’t actually contested and the parties can agree to them. Maybe the information is publicly available. There are any number of reasons it may not be necessary to trouble a non-party to get information.

So, careful analysis may obviate the need to go any further with a requested arbitral summons.    But let’s assume that the needs of the case and the circumstances justify issuance of an arbitral summons.  That brings us to our second question: Does the arbitrator (or panel) have the power to issue the summons? 

We will take that up in the next article.