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ADR IN AVIATION AND AEROSPACE
AVIATION AND AEROSPACE ARE UNIVERSALLY HIGHLY REGULATED, CAPITAL INTENSIVE, HIGH DEGREES OF LEVERAGE AND TIME SENSITIVE.
INDIVIDUALLY OR COMBINED, THESE ELEMENTS DEMAND QUICK AND EFFICIENT RESOLUTION OF DISPUTES.
REGULATIONS NEW AND CONSTENSTLY CHANGE
ADR STANDS FOR ALTERNATIVE DISPUTE RESOLUTION.
ADR PROCESS, DONE RIGHT, SAVE YOU TIME AND MONEY.
ADR PROCESSES TAKE THE PLACE OF LITIGATING A LEGAL MATTER TO A TRIAL BY A JUDGE OR JURY.
A NEGOTIATOR, MEDIATOR, AND ARBITRATOR, ARE NEUTRALS IN ADR TERMS.
NEUTRALS REPLACE JUDGES AND JURIES.
MAGEE ADR INTERNATIONAL MEMBERS SERVE AS NEUTRALS.
MODERN ADR INCLUDES EFFICIENT RESOLUTION OF ANY DISPUTE AT ANY LEVEL IN ALL:
FULFILLMENT OF THE PARTIES’ INTERESTS RESOLVES DISPUTES.
THE DISTINGUISHED MEMBERS OF MAGEE ADR INTERNATIONAL KNOW HOW TO FULFILL THOSE INTERESTS.
OUR MEMBERS DO ANY ADR PROCESS RIGHT.
LEARN MORE ABOUT ADR.
MEET OUR DISTINGUISHED MEMBERS.
OUR FEES & COSTS START AT $150 USD PER PARTY.
LEARN MORE ABOUT ADR OR START THE PROCESS BY CONTACTING US AT +1 866-747-1747 or E-MAIL US. WE WILL TAKE CARE OF THE DETAILS.
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The following is a list of clauses that should be considered in the drafting of an arbitration agreement as part of the original transaction generically and dealing with aircraft.
ARBITRATION PROVIDERS & MANAGERS:
Arbitrations are managed/administrated or non-managed/non-administrated. The former are circumstances where an association is used to fulfill the role of a court in litigation. The latter does not engage an organization for the clerical matters related to the arbitration. The major factors between the two are fees and selection of arbitrators. An association normally has a fee in the thousands of dollars to provide administrative functions. Either type involves attorneys that bill at individual rates that are in addition to the arbitration fees. The combination of fees will quickly accumulate to balances in the tens of thousands of dollars.
An administered arbitration will provide rules and guidelines where a non-administered arbitration may be ad-hoc.
The following table, (Figure __.), is a list of better known arbitration providers. It is highly recommended to utilize a provider if the ADR process is involved for management of the process.
A critical factor is that of including all individuals and entities to the transaction agreement to the arbitration agreement sign the transaction agreement. The reason for this goal is to bind those individuals and entities to any ADR process including arbitration. Their consideration for their signatures is that they will receive compensation by providing services related to the transaction agreement. If they do not sign the transaction agreement, they lose the potential advantages of participation in any ADR process if the process is invoked.
AGREEMENT to DRB, MEDIATION, ARBITRATION and APPEAL:
An ADR: An agreement should provide an overview of how the ADR process is to take place. This should be a simple roadmap and not specific detail beyond the sequence of events and any applicable association rules or statutes.
This section should provide a scope of potential issues that are subject to the ADR process. Caution is given not to limit the scope to one specific issue such as airworthiness. This section should be as inclusive and exhaustive a possible.
NOTICE OF ARBITRATION:
All potential parties to a possible legal claim should be provided with a notice of the creation of a DRB, a mediation, an arbitration and further development of any ADR efforts. If the individual or entity is not a party to any arbitration agreement, this may provide an opportunity for that individual or entity to join in the proceedings, if the parties consent.
MAINTENANCE OF AIRCRAFT, COMPONENTS, AND RECORDS:
Aircraft are unique in that each one requires continued maintenance to some extent. Some require relatively little. Others may require daily schedules of operations and work that may become extremely expensive while additionally requiring maintenance that risk significant expense. The maintenance run of a turbine engine risk significant costs, in excess of $100,000, if improperly performed.
An arbitration agreement related to aircraft should include be reference the manufacturer’s maintenance manual by reference at a minimum.
DISPUTE RESOLUTION BOARD, (DRB):
An ADR and arbitration agreement should take advantage of ADR efforts before arbitration is invoked. This is to save time and money. A DRB is the first step to do so. Specifics must be stated regarding the composition of the DRB panel and strict time periods to act as well as relief available if issues arise regarding the DRB’s function and decisions.
The DRB panel should be composed of at least one neutral attorney and two airmen. All should posses a current working knowledge of the specific subject matter. Knowledge related to the nature of the transaction agreement and legal claims.
SELECTION OF ARBITRATION PANEL:
The selection of DRB and Arbitration panel members should differ from that of the Arbitration panel for efficiency. The Arbitration panel should have at least three members. The chair should be appointed by the governing tribunal such as the court or the administering body. The wings should be at least two in number and selected by a predetermined process stated in the arbitration agreement. A minimum qualification of a wing should be a subject matter expert, without bias to any party and approved by the court or administering body. A selection committee may also be utilized.
Selection of the location(s) for the convening of the DRB and any subsequent arbitration must be addressed with special consideration as to the specific AIRCRAFT. This is due to the size of the AIRCRAFT, ramp or hangar space available, security and costs of repositioning the AIRCRAFT, if necessary. All of these factors must be weighed against additional unique factors related to aircraft. The biggest being the cost associated with the need to ferry the AIRCRAFT, again, if necessary. Multiple locations may be designated depending on anticipated special needs.
This should be limited to a selection of a choice of substantive law and not procedural law. This allows for the choice of a jurisdiction such as a particular state. The selection of a particular state should have some reasonable relationship to the domicile of the primary parties or location of the AIRCRAFT.
A choice of a forum, such as federal court, is problematic for federal courts must have jurisdiction per statue and rule. The parties may not consent to such jurisdiction. Also, state courts will look for minimal contacts to satisfy any jurisdiction questions at the onset of any legal proceedings. The impact is that of any judicial necessity to enforce any issues related to the arbitration agreement.
This phase must be limited in the interest of time and expense. It should be limited in scope and provide for an expedient resolution of any disputes. The same means of discovery as provided for in federal litigation may be followed. However, strict constraints on numbers of discovery request must be followed, such as a limited numbers of witnesses and especially limitations on expert witnesses. Failure to do so allows costs to become prohibitive.
DURATION OF ARBITRATION PROCEEDING:
Time is of the essence in dispute resolution. Reasonable time limits must be provided. A time from notice of arbitration to hearing and decision must be reasonable in length of the number of days so that a proper proceeding may be prepared and presented. However, too long a period simply increase costs without benefit. A 90 to 120 day period to hearing is reasonable. Announcement of a non-reasoned panel decision should be made within five days of concluding the hearing. An additional 45 days of concluding the hearing is a reasoned opinion is reasonable.
AWARDS AND REMEDIES:
Any award, in type, amount and how the award is to be calculated is essential. An award, or sometimes referred to as damages, and their certainty and limitations are major reasons for arbitration. Damages are often separated from costs as components of the award of the panel. A reasonable calculation of an award is that which produces a sum that will return a damaged party to its pre-damaged position. Damages in litigation are designed to make an injured or non-breaching party whole. Arbitration should be no different. There shall be no punitive, puni, exemplary or consequential damages except in extreme cases.
ATTORNEY’S FEES, COST AND INTEREST:
These three items are present in every arbitration. These three items too often become the focus of the dispute between the parties to arbitration. Exacting detail is required with plenary power placed in the arbitration panel to determine how these items are to be addressed.
The arbitration panel should award attorney fees to the prevailing party, if any, as determined by the arbitration panel, all of its costs and fees. “Costs and fees” should mean all reasonable pre-award expenses of the arbitration, including the arbitration panel’s fees, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone, court costs, witness fees, and attorneys’ fees.
Interest should be at pre-award and post award at statutory rates and calculations and paid to the prevailing party by any party determined to be responsible for payment of the award, in whole or part as awards shall be joint and several as determined by the arbitration panel.
The prevailing party should be determined by the arbitration panel based upon the GOVERNING LAW clause jurisdiction’s substantive law.
FORM AND SCOPE OF AWARD:
An arbitration panel ordinarily provides a reasoned or non-reasoned opinion as their decision. The former is similar to a court opinion. It takes time, research and expense to produce. The later is quicker and more cost efficient. However, as with court opinions, the ultimate outcome of a reasoned decision may be more correct than one that has not evolved from a more detailed analysis. Ultimately, for appeal purposes, each are of equal value.
A major factor for the utilization of ADR, including arbitration, is confidentiality. An absolute bar should be placed on all parties with a specific provision of the content of any disclosure outside of the arbitration proceedings. As enforcement, a liquidated damage provision and amount is appropriate. The arbitration panel should be empowered to make a finding regarding any alleged breach.
APPEAL OF CONSTRUCTION ARBITRATION AWARDS:
An appeal is taking a decision to another step available in the arbitration process. A transcript of the arbitration hearing is essential for an appeal. Provided a transcript was requested by a party, an appeal of a decision is possible unless the arbitration agreement expressly waives appeal right. The statutory basis for appeals were previously presented. Additional specific provisions related to appeals should be a part of the arbitration agreement.
Many of the specific provisions of the primary arbitration clauses should be addressed and incorporated in the appeal terms. Notice provisions and timeliness deadlines are threshold items. Selection of an appeal panel is the next new item regarding an appeal. Again, unique to aircraft transactions, provisions must be made and clearly stated for the preservation of the AIRCRAFT during the appeal phase.
The arbitration decision will become final subsequent to a decision that is or is not appealed. Provisions must be made for the enforcement and performance of the arbitration decision. This is the stage that the legal claim will either move to, or return to, a court.
In summary, arbitration considerations should be made as a part of the original transaction document. The considerations must go beyond a simple agreement to arbitrate. They must be detailed and subject matter specific. Doing so will allow an arbitration process to operate as arbitration is intended. Resulting in timely, efficient and fair results that do not require the costs and time related to a court’s intervention.