Many of our clients are members of Arbitration Forums, Inc. (AF), a nonprofit, private arbitration organization that facilitates arbitration hearings between its members. Companies can be a part of a number of different programs, including arbitrating property damage disputes.
By joining AF, a member company signs a Property Subrogation Arbitration Agreement (Property Program). The signatory company must agree to forego litigation against other member companies and submit any personal, commercial, or self-insured property subrogation claim, up to $100,000, to AF for resolution.
However, in complex disputes, including product liability claims, there can be advantages to litigating a matter rather than filing for arbitration. For example, in litigation, discovery can be used to gather manufacturing or design records, witnesses can be deposed, and expert witnesses can be cross-examined to scrutinize their theories and opinions. In arbitration, you may not be able to get this type of information and you do not get to examine the adverse party’s expert report or evidence.
AF has recognized that product liability disputes are uniquely challenging. Therefore, effective January 1, 2015, AF will implement changes to the Property Program in that the agreement will no longer compel arbitration of product liability disputes.
The Article Second of the Property Subrogation Arbitration Agreement will now contain an exclusion that will read:
No company shall be required, without its written consent, to arbitrate any claim or suit if: (i) it is a product liability claim arising from an alleged defective product.
Member companies can still voluntarily submit product liability claims to AF for an arbitration decision. This strikes a good balance between the complex product liability claims that demand expert participation and debate and smaller property damage claims that may not warrant the outlay of costs related to expert depositions and litigation expenses.
Clients should further note that AF announced a few other changes to the Property Program, including lowering the appeal limit from $25,000 to $10,000; implementing a tiered appeal process to allow for an optional third arbitrator when needed; and matching up arbitrator’s experience and knowledge with the type of cases that they decide.
As with any case, care should be taken to make sure that you are bringing your claim in the most advantageous forum. Whether arbitration or litigation, do not be afraid to engage subrogation counsel early in the process should there be any questions on how to best proceed with recovering your claim.
Matthiesen, Wickert & Lehrer, S.C. believes in a scientific, aggressive, yet cost-effective approach to the evaluation and pursuit of all subrogation cases. As an engineer, I am one of the lawyers at MWL who reviews and pursues technical subrogation cases and assists in leading investigations on behalf of our clients. Please contact Gary Wickert at [email protected] if you have any questions or would like us to review a new case for subrogation potential.