Arbitration is a type of dispute resolution – specifically, the private, judicial determination of a dispute by an independent third party. Arbitration proceedings are generally adversarial in nature, but are less formal than a court proceeding. The primary objective of arbitration is to resolve legal disputes quickly, efficiently, and privately. Arbitration is particularly useful where parties would otherwise incur substantial discovery costs, such as in cases requiring the production and examination of electronic information. If properly staffed, an arbitration panel can greatly reduce the inefficiencies associated with the litigation of cases involving electronic disclosure.

One of the key aspects of arbitration is its flexibility. As part of this, arbitration panels are often relieved of all judicial formalities, and expressly informed they may abstain from following the strict rules of law or the strict rules of evidence that bind courts. Panels are usually given this leeway, either as part of the underlying arbitration agreement between the parties or as part of the bylaws of the arbitration agency itself, for two reasons. First, historically, arbitration has been used not solely as a means of enforcing strict legal obligations, but as an honorable engagement intended to effectuate the general purpose of the parties' agreement in a reasonable manner. Second, the members of the panel are usually not legal professionals. Rather, they are lay people with knowledge or expertise in the relevant field that forms the backdrop to the dispute. For example, insurance contract arbitration provisions usually require that all arbitrators be executive officers or former executive officers of insurance companies, or insurance brokers not under the control of either party.

While the panel is usually relieved from following the formal judicial rules of evidence, the panel still must provide the parties with an appropriate set of evidentiary and procedural rules that will govern the arbitration proceeding. In arbitration involving the discovery of electronic information, determining the rules related to digital evidence can be overwhelming to an arbitration panel due to the complexity of information systems and the pervasiveness of digital evidence. To effectively arbitrate such a case, an arbitration panel must be able to adequately define the scope of the electronic disclosure and apply an appropriate procedural framework for the controversy considering the parties' needs and available resources.

The problem is, of course, that while the panel may contain experts in the relevant business field – e.g., insurance, manufacturing, or finance – the arbitration panel will likely fail to include anyone with detailed knowledge of the information systems where documentary evidence key to resolving the dispute may be located. In the absence of such information system expertise, the arbitration panel members will be challenged simply to accurately and reasonably define the scope of discovery, let alone properly apply the principle of proportionality to electronic disclosure or set rules related to meta data. An arbitration panel lacking an electronic discovery expert is a recipe for lengthier hearings, pointless discovery disputes, and the waste of scarce financial resources.

Conversely, a panel containing, or consulting with, an electronic discovery expert possessing both legal and technological expertise will be ready to reasonably define the scope of electronic production, properly balance the cost of discovery against its prospective benefits, and save the parties time and money. Most importantly, an arbitration panel containing an electronic discovery expert will be able to fashion a discovery plan tailored to the parties' information systems early in the litigationproceeding at the meet and confer stage that:

1. Defines the scope of discovery;

2. Defines the permissible set of accessible electronic data;

3. Defines the sources to be searched in the production;

4. Defines the manner in which parties will preserve electronically store information;

5. Defines the format of data production;

6. Defines the procedures and protocols for electronic disclosure (e.g., the role of meta-data);

7. Addresses privilege issues (e.g., the scope of any claw-back provision governing inadvertently produced privileged documents); and

8. Defines party obligations and expectations.

via Defining Discovery In Arbitration.