The arbitrator may order the parties to exchange copies of nonrebuttal exhibits and copies of witness lists in advance of the arbitration hearing.
However, the arbitrator shall have no other power to order discovery or depositions unless and then only to the extent that all parties otherwise agree in writing.
Neither a party, witness, or the arbitrator may disclose the facts of the underlying dispute or the contents or results of any negotiation, mediation, or arbitration hereunder without prior written consent of all parties, unless and then only to the extent required to enforce or challenge the negotiated agreement or the arbitration award, as required by law, or as necessary for financial and tax reports and audits. No party may bring a claim or action, regardless of form, arising out of or related to this agreement, including any claim of fraud, misrepresentation, or fraudulent inducement, more than one year after the cause of action accrues, unless the injured party cannot reasonably discover the basic facts supporting the claim within one year.
The party requesting such relief shall simultaneously file a demand for mediation and arbitration of the dispute, and shall request the American Arbitration Association to proceed under its rules for expedited procedures. In no event shall any such court-ordered temporary injunctive relief continue for more than thirty 30 days.
If any part of this section is held to be unenforceable, it shall be severed and shall not affect either the duties to mediate and arbitrate hereunder or any other part of this section. The written analysis, distributed to management, includes an ADR plan and suggestions on how to strengthen the relationship with the opponent.
If the case can be handled through ADR at or below the calculated risk-exposure level, the company will proceed to resolve it without litigation. The overall aim is to resolve the contention efficiently with little expenditure of time and money. In this circumstance, few companies seriously consider negotiation. In , for example, NCR discovered that one of its suppliers had sent it computer boards that did not conform to specifications.
NCR wanted to return the boards for a refund, but the vendor refused to cooperate on the grounds that NCR had not complained in a timely manner and that, in any event, the supplier could fix the defect. NCR did not want the goods repaired, because improved technology introduced in the interval had made the items virtually obsolete. NCR offered to compromise by returning the boards and claiming only a partial refund or a credit toward future orders of other products. The supplier declined to give a refund in any form, vowed to undertake a legal battle, and hired a large law firm.
Sticking to its policy, NCR declined to enter into litigation. Instead, it filed an arbitration demand. First he objected to arbitration, then he protested the hearing venue, then he introduced a motion for discovery. But the American Arbitration Association dealt with those roadblocks, succeeded in scheduling an arbitration session, and, several days before the hearing, the parties settled.
This case illustrates the routine though not negligible matters that arbitration handles particularly well. Here again, the prospect of arbitration quickly brought the case to its virtually predestined end, with a result almost certainly better than litigation could have achieved.
This case also illustrates the benefits that can stem from the single-minded avoidance of litigation. NCR then made settlement offers built around credits to be applied to future business.
When negotiation failed, the ombud pursued arbitration. Even after the hearing date had been set, the ombud continued doggedly to pursue negotiation and finally hit pay dirt.
In organizations where a preference for ADR has taken hold, fresh approaches to conflict tend to bubble up almost on their own. One example is the Toyota Reversal Arbitration Board mentioned earlier, which is a nonbinding mechanism to settle disagreements with its dealers.
In companies where a preference for ADR has taken hold, fresh approaches to conflict tend to bubble up almost on their own. The board had three distinctive features. First, it laid down rules for the arbitration process rather than allowing the process simply to develop on its own.
Second, it made arbitration decisions binding on Toyota but allowed dealers to appeal. By underscoring the fairness of the procedure, this feature of the program has had the unexpected effect of actually increasing dealer acceptance of arbitration results. Third, it set up an open file of case histories, which has allowed Toyota and its dealers to cite relevant precedents and thus cut straight to a resolution of many disputes without laboring through the entire arbitration process.
Because most disputes are similar, dealers with very little legal expertise can work through the details and find helpful patterns. Many companies can avoid disputes by analyzing root causes and acting on that analysis—an indispensable part of the peaceful approach.
Many companies have developed arbitration not so much to hold down as to disguise both costs and unnecessary procedures. NCR has set up guidelines to deal with this problem. It has found that arbitration looks like, feels like, and works like arbitration when the parties are prepared to pursue the following goals.
The parties agree to stipulate undisputed facts and matters of law and to encourage the arbitrator to rule on disputed matters of law in summary form before hearing evidence. The arbitrator should specify which issues are most likely to generate disputes, and he or she should carefully avoid asking the parties to submit pre-hearing briefs on other issues, which is inevitably a waste of time and resources.
In some cases, no briefs are needed at all. For example, when NCR is the claimant in a hearing called to collect money on an account, the company usually cites the law orally or submits a photocopy of the relevant statute to the arbitrator.
Even when briefs are appropriate—on developing matters of law, say, or where court decisions conflict—NCR has found that their greatest usefulness is in focusing attention on key issues. Arbitrators should be asked to identify the issues on which they want the parties to write briefs. NCR has even gone so far as to ask arbitrators to set page limits on briefs. Prehearing exchanges are invaluable in smoothing the way toward a resolution.
The parties trade exhibits and witness lists, and discuss which items are important to the case and which peripheral. It is very important that these exchanges not resemble the discovery process typical of litigation; they should focus instead on documents to be used in the hearing. Prehearing exchanges often lead to a reduction in the witness lists and to having less important witnesses submit their testimony by affidavit or even by telephone. In order to restrict discussion and head off problems, NCR has drafted damage limitations into the standard ADR clause it includes in all commercial contracts.
In many cases, there is or should be no legitimate argument about the amounts in dispute, which makes extensive damage proof unnecessary.
Where possible, parties should stipulate the extent of damages and the arbitrator should rule on the reasonableness of damage limitations before hearing evidence. In more complicated cases, NCR may go so far as to exact agreement on a dollar floor or ceiling or on so-called baseball arbitration to keep the amount to a reasonable level.
In baseball arbitration, each party picks a figure and the arbitrator must choose one or the other. In adversarial proceedings, each side typically tries to outexpert the other; in arbitration, a limit on the use of experts saves time and money. For instance, instead of retaining opposing damage experts whose testimonies are likely to conflict, it makes good sense for both parties to agree on a single, neutral expert.
Instead of retaining opposing damage experts whose testimony conflicts, both parties should agree on a single, neutral expert. One effective use of expert testimony is to ask each party and the arbitrator to submit key questions for the expert to examine. In some areas—technology, for example—the expert can play a role in root-cause analysis by recommending improvements in products or practices. This is a much more constructive activity than merely offering a partisan opinion.
The standard ADR clause inserted into all NCR commercial contracts has many features that help ensure that arbitration will really be arbitration and not camouflaged litigation. Among them are guidelines on the qualifications of the arbitrator, empowerment of the arbitrator to grant injunctive relief, an agreement that challenges to arbitration or award decisions be governed by federal arbitration law and that the challenger must pay costs and fees if it loses , and limitations on discovery.
Boosting commitment to ADR and avoiding the trap of litigation-in-disguise are both important steps in the effort to replace confrontation with negotiation. The essential third step is to create a systematic process that mandates ADR as the first step in every legal action. By DARP rules, every dispute is entered into a PC database within 24 hours of its inception, and everyone at NCR who needs to know is notified, from those involved in the complaint to those who may help to resolve it.
Within three days, NCR notifies opposing counsel that it is addressing the problem with a view toward peaceful resolution. Then came a glitch: while the contract called on NCR to supply one repeated-use, or multipass, ribbon cassette for each printer, it turned out that no vendor could deliver a multipass ribbon to the specs of the printers designed for the project. Humphrey-Hawkins explicitly charged the Federal Reserve to pursue full employment and price stability, required that the central bank establish targets for the growth of various monetary aggregates, and provide a semiannual Monetary Policy Report to Congress.
As Fed Chairman Arthur Burns would later claim, full employment was the first priority in the minds of the public and the government, if not also at the Federal Reserve Meltzer But there was also a clear sense that addressing the inflation problem head-on would have been too costly to the economy and jobs. There had been a few earlier attempts to control inflation without the costly side effect of higher unemployment.
The Nixon administration introduced wage and price controls over three phases between and Those controls only temporarily slowed the rise in prices while exacerbating shortages, particularly for food and energy. The Ford administration fared no better in its efforts. It was a failure. By the late s, the public had come to expect an inflationary bias to monetary policy.
And they were increasingly unhappy with inflation. Survey after survey showed a deteriorating public confidence over the economy and government policy in the latter half of the s. And often, inflation was identified as a special evil. Interest rates appeared to be on a secular rise since and spiked sharply higher still as the s came to a close.
And inflation was widely viewed as either a significant contributing factor to the economic malaise or its primary basis. But once in the position of having unacceptably high inflation and high unemployment, policymakers faced an unhappy dilemma.
Fighting high unemployment would almost certainly drive inflation higher still, while fighting inflation would just as certainly cause unemployment to spike even higher. When he took office in August, year-over-year inflation was running above 11 percent, and national joblessness was just a shade under 6 percent.
By this time, it was generally accepted that reducing inflation required greater control over the growth rate of reserves specifically, and broad money more generally. But it was clear that sentiment was shifting with the new chairman and that stronger measures to control the growth of the money supply were required.
In October , the FOMC announced its intention to target reserve growth rather than the fed funds rate as its policy instrument. Fighting inflation was now seen as necessary to achieve both objectives of the dual mandate, even if it temporarily caused a disruption to economic activity and, for a time, a higher rate of joblessness.
Over time, greater control of reserve and money growth, while less than perfect, produced a desired slowing in inflation. This tighter reserve management was augmented by the introduction of credit controls in early and with the Monetary Control Act.
Over the course of , interest rates spiked, fell briefly, and then spiked again. Lending activity fell, unemployment rose, and the economy entered a brief recession between January and July. Inflation fell but was still high even as the economy recovered in the second half of But the Volcker Fed continued to press the fight against high inflation with a combination of higher interest rates and even slower reserve growth.
The economy entered recession again in July , and this proved to be more severe and protracted, lasting until November The Great Inflation was over. By this time, macroeconomic theory had undergone a transformation, in large part informed by the economic lessons of the era.
The important role public expectations play in the interplay between economic policy and economic performance became de rigueur in macroeconomic models. The importance of time-consistent policy choices—policies that do not sacrifice longer-term prosperity for short-term gains—and policy credibility became widely appreciated as necessary for good macroeconomic results. Today central banks understand that a commitment to price stability is essential for good monetary policy and most, including the Federal Reserve, have adopted specific numerical objectives for inflation.
To the extent they are credible, these numerical inflation targets have reintroduced an anchor to monetary policy. And in so doing, they have enhanced the transparency of monetary policy decisions and reduced uncertainty, now also understood to be necessary antecedents to the achievement of long-term growth and maximum employment.
Friedman, Milton. Gordon, Robert J. Meltzer, Allan H. Louis Review 87, no. Chicago: University of Chicago Press, Phelps, E.
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