An AIRROC DRP Roadmap: How Should the DRP Be Applied to My Dispute

By Seema A. Misra

The interactive workshop, “An AIRROC DRP Roadmap: How Should the DRP Be Applied to My Dispute,” kicked off with an introduction by Jonathan Rosen, who explained that the Dispute Resolution Process (“DRP”) evolved from a specific need – voiced openly and frequently during past Rendez-vous meetings – for a mechanism to efficiently resolve small balances (less than a million dollars) on which parties have a genuine difference of opinion, but which do not merit the time and cost of a traditional arbitration. Indeed, a live voting session at the workshop’s outset revealed that traditional arbitrations often took more than a year to resolve, with total costs amounting to more than the value of the dispute.

The DRP creates a flexible framework within which parties can custom-design a timely, cost-effective resolution of such disputes. Rosen highlighted the few, fixed features:

  • First, the parties must agree on a single neutral arbitrator. AIRROC maintains a list of arbitrators, who, as a service to the community, have agreed to perform DRP arbitrations for $150/hour.
  • Second, the DRP presumes there will be no discovery, unless parties agree otherwise.
  • Finally, there will be no live witnesses or other hearing testimony, and the process is confidential, with a binding final award that will be enforced only if there has not been compliance.

Thereafter, Karen Amos (Resolute) and Marianne Petillo (ROM Re) candidly shared their experiences in successfully resolving smaller dollar disputes. In a discussion moderated by Seema Misra (Stroock), the audience was given a roadmap of the issues, questions and considerations in designing a DRP arbitration. Both Amos and Petillo agreed that early cooperation in selecting the arbitrator, or failing that, another random selection process, was critical. The Panel then presented the variety of features which the parties could agree on, such as the form of award (including, high-low damages), limited use of counsel, the scope of discovery (documents and depositions), and whether the hearing required testimony. It was evident that if parties are committed to the process and maintaining their relationships, the DRP provides a valuable alternative means of dispute resolution.

The audience then separated into cedent and reinsurer groups and discussed three fact patterns – aggregation, late notice, and contract interpretation. Each group was asked to brainstorm if it could use the DRP, and if so, how to tailor it to the facts. The breakouts and subsequent negotiations provided a lively means of discussing what aspects of traditional arbitration were truly necessary. All of the groups reported that they had agreed to use the DRP, as well as the qualifications of the single arbitrator. In a closing voting session, 43% of the audience reported it would use the DRP without qualification, and the remaining 53% would use it for smaller disputes. The audience identified impediments, in order: (i) the inability to agree on a single arbitrator (43%); (ii) counter parties’ refusal to use the DRP (30%); (iii) lack of knowledge of the process (17%); and, (iv) the suitability of available arbitrators (11%).