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Top Ten Mistakes Parties Make During the Arbitration Process

Whether you are the claimant or the respondent, no one likes to lose.  But when a DRC member loses a case simply because they didn’t properly explain and document their position it can be a frustrating experience.

 

In an effort to help DRC members prepare for mediation or arbitration, we have compiled the following list of things that companies frequently overlook or simply do not think are important. We have seen cases that could have gone in a different direction if the parties would have paid more attention and taken the time to explain and document their case better to the arbitrator. Here is our list of top ten mistakes to avoid when preparing or defending your case:

 

  • Not including what you’ve learned during the informal mediation process (informal claim) prior to the Arbitration process. Important points are often uncovered during the informal exchange of information.  The arbitrator does not have access to the arguments or submissions from the informal mediation. It is your job to explain every detail of the transaction so that the arbitrator does not have to fill any gaps. 
  • Not including a statement or submission from the buyer or salesperson involved in the transaction regarding the events that transpired. If you do not have firsthand information, your comments may be taken as hearsay and not as   firsthand knowledge. 
  • Not clarifying or denying the other party’s comments or statements.  You must deny and/or rebut any position you disagree with.  If you are in doubt as to the weight of your evidence (fax, email, etc.) as a response to the other party’s presentation, provide a sworn statement along with it. 
  • Not submitting the evidence which supports your allegations. When parties disagree, it is the evidence the arbitrator must look at to reach a decision.
  • Not providing legible documents and not labeling exhibits consecutively for easy reference by the arbitrator.  
  • Not providing evidence that a document or an agreement was faxed or emailed, such as a fax confirmation, email confirmation, or the reply to it by the other party.
  • Not providing an account of sales when product was handled for someone’s account.  We have seen cases where the respondent clearly provided evidence of the breach of contract but failed to provide any basis upon which the remittance was made. 
  • Not providing an itemized account of sales. An account of sales must include the date, amount, and price sold for each lot (referencing the invoice or receipt of the sale is a bonus). Failing to provide the bills for the expenses such as freight bill, inspection invoice, warehousing invoice, customs fees, and any other expense agreed upon.
  • Not requesting a hearing when you believe you should be heard by an arbitrator.  If you do not believe you can present your case adequately in writing, you have the right to request a hearing on claims over US$15,000.
  • Not being willing to pay the undisputed amount before the file goes to arbitration.  This will result in increased filing fees, interest if awarded, and in some cases may influence the arbitrator’s apportionment of fees and interest if he views the amount being withheld as abusive. 

 

Prior to initiating the arbitration process, DRC staff can help with what you need to present or defend your case. Once in arbitration, DRC staff can only provide guidance on procedural questions. On the other hand, in an expedited arbitration (claims less than US$50,000), the arbitrator generally will base his/her decision on the parties’ submissions and rarely will contact the parties for clarification or additional information. However, in Formal Arbitration or when a hearing has been requested, the Arbitrator will give you every opportunity to make a clear and concise case.  If you do not feel you can present or defend your case properly, we highly recommend that you seek legal assistance, or settle the case before it goes to arbitration.