For more than 25 years the American Arbitration Association (AAA)/American Bar Association (ABA) Code of Ethics for Arbitrators in Commercial Disputes served as the definitive source of ethical guidance for arbitrators and others involved in the dispute resolution field. Although the Code is intended in at least some respects to have an aspirational component, it has a very real-life application to arbitrators serving on cases administered by the AAA, since AAA arbitrators sign an oath stating they will abide by the provisions of the Code.
As noted in the 2004 Revised Code's Preamble, the use of arbitration to resolve a variety of disputes forms a significant part of the system of justice on which our society relies for a fair determination of legal rights. Arbitrators therefore undertake serious responsibilities to the public, as well as to the disputing parties. Those responsibilities include important ethical obligations. Few cases of unethical behavior by commercial arbitrators have arisen, but the Code sets forth generally accepted standards of ethical conduct for the guidance of arbitrators and parties in commercial disputes, in the hope of contributing to the maintenance of high standards and continued confidence in the process of arbitration.
The Code was originally drafted in 1977 by a joint committee consisting of representatives from the AAA and the ABA, in an effort to provide ethical guidelines and standards of conduct for arbitrators and others involved in the field of alternative dispute resolution. The 1977 Code has offered critical guidance to arbitrators and organizations providing arbitration services, and has been cited with approval by numerous state and federal courts.
However, having assessed that legal developments and increased international commercial transactions over the past 25 years warranted revisions to the 1977 Ethics Code, a proposed revision prepared by a joint ABA/AAA working group was approved by the AAA's Executive Committee in September 2003, and by the ABA House of Delegates in February 2004. In March of 2004 the AAA Revised Code of Ethics for Arbitrators in Commercial Disputes became effective.
The 2004 Revised Code of Ethics for Arbitrators in Commercial Disputes preserves many elements of the 1977 Code of Ethics, while bringing it in line with modern practice. The provisions of the Revised Code are subject to any contrary principles that may be found in governing law or applicable arbitration rules and also defer an agreement of parties to an arbitration to proceed under different rules or standards.
The most substantive changes to the 2004 Revised Code of Ethics for Arbitrators in Commercial Disputes include:
Presumption of Neutrality: A presumption of neutrality is applied to all arbitrators, including party-appointed arbitrators. This reverses the presumption of non-neutrality for party-appointed arbitrators that was contained in the 1977 Code. The concept of neutrality encompasses both independence and impartiality. For cases where the parties agree to the use of non-neutral arbitrators, the Revised Code delineates ethical obligations that non-neutral arbitrators are expected to maintain.
Duties of Party-Appointed Arbitrators: A party-appointed arbitrator is obligated, under the Revised Code, to ascertain and disclose whether he or she will be acting as a neutral or non-neutral arbitrator as early in the arbitration as possible. In the event of doubt or uncertainty, party-appointed arbitrators will serve in a neutral capacity until such doubt or uncertainty is resolved.
Duty to Disclose Interests and Relationships: The Revised Code subjects all arbitrators, whether serving as neutral arbitrators or non-neutral arbitrators, to the same obligation to disclose interests or relationships likely to affect impartiality or which might create an appearance of partiality.
Communications with the Parties and the other Arbitrators: Limits on permissible communications between arbitrators and parties are clarified. New guidelines are established regarding communications between party-appointed arbitrators and the chair of the tribunal in tripartite arbitrations.
Arbitrator Suitability: In addition to imposing impartiality and independence standards that form the basis of the presumption of neutrality, the arbitrator is obligated to determine his or her competence and availability to serve in the case.
The 1977 Code enhanced the integrity of arbitration process both domestically and internationally, and the 2004 revision improves upon the original, bringing the Code in line with contemporary domestic and international practices and further contributing to the maintenance of high standards and continued confidence in the process of arbitration.
The Revised Code. a side-by-side comparison of the 2004 and 1977 Codes, and other information about the Code is available on the AAA website at www.adr.org.
Published January 1, 2005.