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AAA Releases Report on Automobile Industry Arbitration Program
Dec 21 2010

Nearly 1,600 car dealerships turned to arbitration to settle their disputes with General Motors and Chrysler under a special program administered by the American Arbitration Association, according to an AAA report to Congress.

The AAA was designated by Congress in December 2009 to administer the Automobile Industry Special Binding Arbitration Program under Section 747 of Public Law 111-117. The program allowed owners of car dealerships to seek reinstatement of their businesses using binding arbitration if they thought their businesses were improperly closed by GM and Chrysler, which shuttered thousands of dealerships as part of their Chapter 11 reorganization.

AAA President and CEO Bill Slate said the program demonstrates the potential for the use of alternative dispute resolution. "In just seven months, nearly 1,600 businesses were provided recourse to address their concerns. At the same time, the arbitration program did not add to the burdens of the nation's courts, and not one dollar of direct taxpayer funds was expended," he said in the report.

The program began in late December and ended in July. The AAA drew on its pool of over 6,000 neutrals, including former judges and experts in the auto industry field, to assemble a roster of arbitrators for the program. A total of 350 arbitrators were mobilized and assigned cases under the program, according to the report.

The dispute resolution process was made efficient by extensive use of AAA WebFile, an online resource that allows parties, counsel, and arbitrators to carry out a number of functions electronically, including document filing, arbitrator selection, and transmission of final arbitral determination. The report said 75 percent of arbitrators were selected by parties via AAA WebFile.

The report also said the program required no direct taxpayer funding or congressional appropriations because the parties paid for their own expenses. To further minimize cost, the AAA applied its fixed filing fee for cases with non-monetary claims. The Association also offered parties the opportunity to use its Flexible Fee Payment Schedule, a pilot program that allowed parties to pay in more increments, thereby saving money for parties if their cases did not go through the entire dispute resolution process, as occurred with many cases that settled.

Of the 1,575 arbitration cases filed under the program, 803 were settled, 166 cases received arbitral determination, 493 were withdrawn, and 113 were administratively closed (which means those cases did not advance at all).

The report said the AAA is unable to specify how many dealerships had been reinstated as a result of the program because it does not have the authority to require parties to disclose details of their settlement.