Who Should Pay For Arbitrations?

After reading one of my archival posts on Arbitration, Connecticut home inspector Martin Greenberg wrote:

“Joe, I recently attended a CT Law course taught by an attorney. He indicated that the AAA has recently changed its practices and is now looking to the defendant for a substantial sum of money as the case initiates. He advised to specify arbitration using an attorney qualified to arbitrate and with related experience.

What is your opinion?

Martin”

I think that AAA may be feeling the economic pinch as much as the rest of us and must think that transferring the financial burden to defendants is just what the doctor ordered to gin up a slew of new arbitration matters by removing the financial disincentive to the filing of ludicrous claims.

Inspectors can head that change off by inserting the following phrase into the Arbitration Clause of their contracts: “Client agrees to and shall bear all filing fees required by the American Arbitration Association.”

I am not sure what the Connecticut attorney meant by “an attorney qualified to arbitrate” or what he meant by “related experience.” Many of the arbitrators who hear cases for the AAA are attorneys but one certainly need not be an attorney to qualify as an arbitrator. I suspect that non-attorney arbitrators must have to undergo some training in the Rules of Evidence before becoming “qualified”. But any experienced trial attorney, in my estimation, would be “qualified to arbitrate”, ipso facto.

I certainly hope that the Connecticut attorney did not mean “experience in the home inspection industry” by “related experience”, though I really can not imagine what else he could have meant.

I have written at length elsewhere that not only do arbitrators not need to know anything about home inspections but it is much better for the parties – and, especially, the home inspector – if they do not have the slightest notion of what a home inspection is.

What you want is an arbitrator who will listen to the claimant’s sob story about how he discovered wood rot “as plain as day” in his kitchen and how he can’t believe that the inspector managed to miss that during his inspection but who will withhold his judgment until he hears that the “plain-as-day” wood rot was only “discovered” after the contractor who was remodeling the kitchen had ripped out the existing cabinetry behind which the “plain-as-day” wood rot was suddenly revealed.

Upon learning that home inspectors are not permitted to dismantle kitchen cabinetry during a limited, non-invasive, visual inspection, the arbitrator will find in favor of the defendant.