One of the big selling points for arbitration has been discovery is supposed to be cheaper and less formal. Many in practice would disagree, concluding instead that discovery has either become sloppy and incomplete or every bit as contentious, prolonged and expensive as the system its supposed to be an alternative to. In an effort to explore the problems and potential solutions, the National Association of Securities Dealers has announced a two year voluntary pilot project designed to deal with discovery in securities arbitrations. Many who arbitrate in venues other than the NASD would argue “it ain’t the only discovery system that’s broken!” Let’s hope the NASD lead in looking at the issues (regardless of the process they have proposed) will spur the AAA, ICC, NAF, WIPO, JAMS and others to look critically at their own rules and get proactive in updating them. Technorati Tags: arbitration, ADR, law

This morning, the Third Court of Appeals issued a memorandum opinion clarifying the technical requirements Rule 683 imposes on a temporary injunction. According to the Court, a TI must include a specific trial date lest it be void, even, as in this case, when the trial court in the underlying lawsuit (Hays County District Court here) has also granted a motion to compel arbitration, effectively precluding the possibility of a trial. The Court of Appeals also notes that, at the time the TI was entered, the motion to compel arbitration had not yet been filed; the Court almost suggests, in dicta, that had the TI identified a date set to begin arbitration, it might have passed muster under Rule 683: Without a date set to begin arbitration or trial, La Ventana is not protected from the risk that this temporary injunction could effectively become a permanent injunction. [citation omitted] The trial court could have accounted for the possibility of arbitration and also adhered to Rule 683 by setting the case for trial on a specific date and, in the event that arbitration occurred before that, removing the case from the docket. Cause No. 03-05-00234-CV

[ed. note: we’ve asked a number of our colleagues to offer guest-blogs about Texas dispute resolution, and our old friend Rick Freeman is the first to chime in. We look forward to continuing columns from Rick.] I am honored to have been extended the opportunity to contribute to the KarlBayer.com blog. I know Karl Bayer and Rob Hargrove to be extremely talented and hardworking trial lawyers and dispute resolution specialists. I will attempt to provide some insight into the current status of the law, concentrating for now on the area of arbitration. Through these columns, over time, I hope to discuss different aspects of arbitration as I see them. ARBITRATION AS AN EFFECTIVE DISPUTE RESOLUTION SYSTEM As a trial lawyer with over 25 years of experience trying jury trials, I am quite experience in the dispute resolution system based on allowing 12 community members — considering only the evidence admitted pursuant to the Rules of Evidence and subject to the instructions of the trial judge — to decide claims that are brought in lawsuits. I personally prefer the jury system. But times have changed. There is clearly a large movement of individuals and businesses, supported by decisions of the highest courts of the federal and state judiciaries, who believe arbitration and not jury trial is the best way to resolve disputes. In the last 10 years I have arbitrated a significant number of disputes. These include personal injury claims, employment claims, civil service claims, contract claims, and claims involving defective construction. My experience in these arbitrations leads me to believe that arbitrations can be an effective method to resolve disputed issues. By effective I do not mean that my client was always the winner. What I mean is that the arbitration process was ultimately deemed to allow each side to present its side of the dispute. And that, once the evidence was presented, the resulting arbitration award was clearly based on the evidence presented. Arbitrations, without more, are neither good nor bad. A good arbitration is one that allows a fair determination of the parties’ disputed issues. On the other hand, a bad arbitration is one that, for whatever reason, does not provide a fair determination. Ultimately, the determination of whether arbitrations are an effective way to resolve disputed issues will be based on whether or not the parties feel that they got a fair opportunity to present their evidence on the disputed issues and whether or not the resulting arbitration award is based on the evidence presented. To be an effective way to resolve disputes, arbitrations need to strive for fairness, both procedural fairness and substantive fairness. Since the lawyers for the parties are required to zealously advocate their client’s position, they cannot be expected to strive for this type of fairness. This fairness has to come from the arbitration clause provisions and the implementation of a fair system by the arbitrator. If the arbitration provision is fair and the arbitrator implements the arbitration fairly, arbitration will be an effective method to resolve the dispute. We have this fairness in jury trials because the rules of procedure and evidence are known to all and the trial judge is required to follow proper procedures and fairly implement the rules of procedure and evidence. It the trial is not procedurally and substantively fair, it is subject to reversal on appeal. With arbitrations, many times both the rules of procedure and evidence are not specified. Add to that that the great, great majority of arbitrations are binding. There is little or no right to appeal procedural or substantive rulings. Whether the arbitration provision is skewed to one side or the arbitrator fails to implement it properly, there is generally no ability to appeal the resulting arbitration award. If this occurs, there is a high likelihood that at least one party to the dispute will legitimately feel that the process was unfair and the resulting award is not fair. Arbitration fails as an effective method of dispute resolution if there are legitimate complaints about the fairness of the system. In my next column I will begin to explore the types of fairness issues that need to be resolved in order for arbitration to be an effective dispute resolution system. Email Rick your comments

This morning, the Third Court of Appeals issued an opinion in a case involving a Municipal Utility District’s attempts to enforce restrictive covenants which, according to the MUD, the trial court and the Third Court of Appeals, prevented a couple from parking a thirty foot travel trailer at their Anderson Mill home and from building a “trailer-port” to house the trailer. The trial court had entered judgment on behalf of the MUD but had chosen not to award any attorneys’ fees to the MUD; the Third Court of Appeals affirmed the judgment on the merits but reversed the refusal to award fees. According to the Court of Appeals, when a MUD brings a restrictive covenant suit under Section 54.237 of the Water Code and prevails, attorneys’ fees must be awarded, and the trial court has no discretion in the matter. The case also discusses the evidentiary standard by which courts of appeals review a jury’s decision on whether or not an enforcing party has waived the right to seek to enforce a restrictive covenant. Cause No. 03-04-00369-CV