Commercial Litigation and Arbitration

American Arbitration Association Rules Do Not Automatically Empower Arbitrators to Issue Injunctive Relief — Who Knew?

Courts have been known to point to Rule 34 of the Commercial Arbitration Rules of the American Arbitration Association as an agreed source for the issuance of injunctive relief. See, e.g., Delta T Corp. v. Sun-North Sys., 2006 U.S. Dist. LEXIS 83655 (E.D. Ky. Nov. 15, 2006). Reading the Rule, this is understandable. Reading it, you would think that the arbitrators are authorized to issue injunctive relief. Entitled Interim Measures, Rule 34 provides:

(a) The arbitrator may take whatever interim measures he or she deems necessary, including injunctive relief and measures for the protection or conservation of property and disposition of perishable goods.

(b) Such interim measures may take the form of an interim award, and the arbitrator may require security for the costs of such measures.

(c) A request for interim measures addressed by a party to a judicial authority shall not be deemed incompatible with the agreement to arbitrate or a waiver of the right to arbitrate.

But this Rule is marked with two asterisks. The asterisks are not clearly explained in the pamphlet or on line, but, according to a senior administrator in the New York office who stopped by my office this week, the asterisks reflect that this Rule is “optional” and must be separately agreed to by the parties. If nobody knows that an optional rule is optional, does that make it automatic?

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