3.01  The American Arbitration Association (AAA) first promulgated rules specific to wills and trusts arbitration in July 2003.¹ The AAA subsequently has amended those rules several times,² most recently in June 2012.³ This chapter focuses on the (p. 50) AAA’s June 2012 Wills and Trusts Arbitration Rules (hereinafter AAA Wills and Trusts Arbitration Rules or the Rules).

3.02  The Introduction to the AAA Wills and Trusts Arbitration Rules points out that every year the executors of estates and the trustees of family trusts, charitable trusts, and commercial trusts administer billions of dollars’ worth of property with respect to the estates and trusts for which they serve as fiduciaries.⁴ Inevitably, disputes arise with respect to the administration of these estates and trusts and the interpretation of these wills and trust instruments. The Introduction posits that arbitration may be a suitable means for resolution of these disputes: ‘Arbitration is an effective way to resolve these disputes privately, promptly, and economically, utilizing as the arbitrator a lawyer or lawyers with substantial experience in the area of wills, trusts and estates.’⁵

3.03  Implicit in the touting of these virtues of arbitration by the drafters of the AAA Wills and Trusts Arbitration Rules is the understanding that the drafters sought to promulgate rules for administering wills and trusts arbitrations that would maximize these benefits of arbitration.⁶ Moreover, implicit in the very concept of arbitration rules specific to wills and trusts arbitrations is the expectation that the drafters would consider the nature of will and trust disputes in promulgating such specialized arbitration rules and would seek to promulgate rules complementary to this nature. This chapter evaluates the AAA Wills and Trusts Arbitration Rules in light of the goals that presumably were at the centre of this pioneering effort to craft rules specific to the arbitration of will and trust disputes and therefore considers the extent to which the Rules promote the private, expeditious, cost-effective, and expert resolution of will and trust disputes.⁷

3.04  Privacy and confidentiality historically have been typical features of arbitration. Arbitration hearings ordinarily are closed to the public. Pleadings and awards in arbitration rarely become part of the public record. The arbitrator generally is understood to have an obligation to maintain the confidentiality of information she learns in the course of the arbitration.⁸

3.05  The parties to a will or trust dispute especially might be expected to prize the virtues of privacy and confidentiality in arbitration.⁹ Such disputes often centre on financial information, personal relationships, and health records that the parties would strongly prefer to keep private.¹⁰ The testator or settlor who anticipates a dispute over her estate or trust which might focus on the details of her private life and state of mind especially might desire to keep such details private.¹¹

3.06  The AAA Wills and Trusts Arbitration Rules include basic provisions to promote privacy in arbitration. Rule 22 provides, ‘[t]he arbitrator and the AAA shall maintain the privacy of the hearings unless the law provides to the contrary.’¹² To this end, Rule 22 invests discretion in the arbitrator ‘to determine the propriety of the attendance [at a hearing] of any person other than a party and its representatives’.¹³ (p. 52) This rule further expressly gives to the arbitrator ‘the power to require the exclusion of any witness, other than a party or other essential person, during the testimony of any other witness’.¹⁴

3.07  At the same time, Rule 22 provides, ‘Any person having a direct interest in the arbitration is entitled to attend hearings.’¹⁵ The rule does not expressly define what might constitute a ‘direct interest’. Given the balance of Rule 22, however, the most plausible interpretation of ‘direct interest’ would limit the scope of the term to parties to the arbitration only.¹⁶

3.08  Rule 22 of the AAA Wills and Trusts Arbitration Rules is nearly identical to Rule 25 of the AAA Commercial Arbitration Rules.¹⁷ No other part of the Wills and Trusts Arbitration Rules specifically provides for privacy or confidentiality in arbitration. Thus, the drafters of the Wills and Trusts Arbitration Rules do not appear to have paid any particular attention to the need for privacy and confidentiality specifically in wills and trusts arbitration.

3.09  The AAA Wills and Trusts Arbitration Rules might be revised to enhance privacy and confidentiality principally in two ways. First, the Rules might expressly authorize the arbitrator to issue orders to protect confidential information. For example, the AAA Employment Arbitration Rules expressly provide that an arbitrator ‘shall have the authority to make appropriate rulings to safeguard that confidentiality [of the arbitration], unless the parties agree otherwise or the law provides to the contrary’.¹⁸ Similarly, the Judicial Arbitration and Mediation Services, Inc. (JAMS) Comprehensive Arbitration Rules and Procedures expressly provide that ‘[t]he Arbitrator may issue orders to protect the confidentiality of proprietary information, trade secrets or other sensitive information.’¹⁹

(p. 53) 3.10  Second, the Rules might extend the obligation to maintain the confidentiality of the arbitration beyond the arbitrator and the arbitral organization to the parties to the arbitration. For example, the International Institute for Conflict Prevention & Resolution (CPR) Administered Arbitration Rules provide that, subject to certain specified exceptions, ‘[u]nless the parties agree otherwise, the parties, the arbitrators and CPR shall treat the proceedings, any related discovery and the decisions of the Tribunal, as confidential.’²⁰ Thus, the Rules might expressly direct the parties to maintain the confidentiality of the will or trust at issue as well as any sensitive financial or personal information to which a party is exposed via the arbitration process. Given that the present AAA Wills and Trusts Arbitration Rules lack a provision expressly authorizing the arbitrator to issue protective orders and fail to extend to the parties the obligation to maintain the confidentiality of the arbitration, a party or parties considering adopting the Rules may wish to provide in the will, trust, or arbitration contract for such confidentiality protections.

3.11  A testator or settlor may reasonably be concerned that prolonged and complex litigation relating to her will or trust may deplete assets of her estate or trust.²¹ Arbitration offers the potential of a faster, more efficient, and thereby more economical means of will or trust dispute resolution.²² Generally, savings in arbitration of time and resources is promoted by arbitration rules that provide for effective arbitrator management of an arbitral process that calls for simplified pleading and motion practice, strictly limited discovery, informal hearings (when necessary), a concise award, and narrow grounds for appeal. The AAA Wills and Trusts Arbitration Rules contain a number of these types of standard provisions.

3.12  The AAA Wills and Trusts Arbitration Rules authorize the AAA, at its own discretion or at the request of a party, to convene an administrative conference ‘to expedite (p. 54) the arbitration proceedings’.²³ The conference may be conducted in person or by telephone and may cover preliminary issues such as arbitrator selection and exchange of information.²⁴ Once the arbitrator is appointed, the Rules provide that the arbitrator, on her own initiative or at the request of a party, may hold a ‘preliminary hearing’, also known as a management conference, to plan for the efficient management of the case.²⁵ The conference may be held in person or by telephone and may focus on ‘preliminary matters’ such as clarification of claims and issues and the schedule for the hearings.²⁶

3.13  The Rules do not mandate that the arbitrator hold a management conference. In contrast, the AAA Employment Arbitration Rules provide, ‘[a]s promptly as practicable after the selection of the arbitrator(s), but not later than 60 days thereafter, an arbitration management conference shall be held among the parties and/or their attorneys or other representatives and the arbitrator(s).’²⁷ The management conference affords the arbitrator a valuable opportunity to learn from the parties the basic outlines of their dispute and to plan for and schedule an efficient arbitration process. The testator, settlor, or parties selecting will or trust arbitration, therefore, may want to provide in the will, trust, or arbitration agreement that the management conference shall be mandatory.²⁸

3.14  Rule 28 of the AAA Wills and Trusts Arbitration Rules provides, ‘[t]he arbitrator may postpone any hearing upon agreement of the parties, upon request of a party for good cause shown, or upon the arbitrator’s own initiative.’²⁹ This provision differs from the parallel rule in the AAA Employment Arbitration Rules, which makes postponement of a hearing mandatory upon agreement of the parties.³⁰ Where the parties have made a joint request for postponement of a hearing, an arbitrator will be reluctant to refuse to postpone the hearing, regardless of the applicable arbitral rule, for fear of having her arbitration award vacated on the ground that she has been ‘guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown’.³¹ Nonetheless, the AAA Wills and Trusts Arbitration Rules promote efficiency by authorizing the arbitrator to refuse to postpone a hearing, since that discretion gives the arbitrator additional leverage with the parties to require continued movement toward an expeditious resolution of their dispute.

3.15  The AAA Wills and Trusts Arbitration Rules allow for informal and minimal pleading. Rule 4 encourages the parties who are filing a demand for arbitration, a counterclaim, or an answer to a demand ‘to provide descriptions of their claims in sufficient detail to make the circumstances of the dispute clear to the arbitrator’.³² Rule 4 also provides, however, that the respondent need not file an answer at all and, if the respondent does not file a timely answer, ‘the respondent will be deemed to deny the claim’.³³ Such lax pleading requirements may, in the end, impair arbitral efficiency. The respondent’s filing of an answer to the demand forces the respondent to educate herself about the claimant’s demand and typically is the first opportunity for the respondent to educate the arbitrator and the opposing party about the respondent’s perspective on the case. Foregoing this early education may be expected to slow the arbitration process. On the other hand, such lax pleading requirements, which are common in arbitral rules,³⁴ may be especially well suited to will and trust arbitration, since some respondents may not necessarily be adverse to the claimant.³⁵

3.16  Significantly, the AAA Wills and Trusts Arbitration Rules make no express provision for any dispositive motions. Given the folklore that succession law is prone to generate vexatious strike suits,³⁶ the testator or settlor may wish to provide in her will or trust for the possibility of a dispositive motion in an appropriate case. The AAA Commercial Arbitration Rules provide a model clause that the testator or settlor may wish to incorporate: ‘The arbitrator may allow the filing of and make rulings upon a dispositive motion only if the arbitrator determines that the moving party has shown that the motion is likely to succeed and dispose of or narrow the issues in the case.’³⁷ By requiring the parties to get the arbitrator’s informed permission before filing a dispositive motion, the commercial standard is designed to encourage motions that are likely to promote efficiency and economy and to discourage motions that are likely to impede such efficiency and economy. At a minimum, the provision is intended to ensure that a party will not be put to the effort and expense of responding to a dispositive motion unless the motion has substantial merit on its face.

3.17  The AAA Wills and Trusts Arbitration Rules significantly limit discovery as compared to probate litigation in court. Rule 20 invests the arbitrator with the authority to order written discovery (‘the production of documents and other information’) ‘consistent with the expedited nature of arbitration’.³⁸ The absence of any reference to oral discovery in the Rules suggests that depositions shall not be allowed under the Rules.³⁹ At a minimum, this omission suggests that depositions shall be strongly disfavoured.

3.19  This authority includes the discretion to ‘exclude evidence deemed by the arbitrator to be cumulative or irrelevant’.⁴² Legal rules of evidence do not apply at the evidentiary hearing.⁴³

3.20  The AAA Wills and Trusts Arbitration Rules provide for a timely and concise award. Rule 41 requires the arbitrator to issue her award in the case ‘no later than 30 days from the closing of the hearing’ unless the parties agree otherwise or the law imposes a different requirement.⁴⁴ Rule 42(b) provides that the arbitrator need not issue a reasoned award ‘unless the parties request such an award in writing prior to appointment of the arbitrator’.⁴⁵

(p. 57) 3.21  The latter provision is in accord with traditional practice. Most arbitration agreements do not require the arbitrator to issue a reasoned opinion, at least in the domestic realm.⁴⁶ Traditional thinking is that a reasoned opinion is not desirable principally for two reasons. First, given that the arbitrator bills by the hour for her time, a reasoned opinion will add to the expense of the arbitral process. Second, a reasoned opinion makes it easier for the losing party to challenge the arbitration award in court.

3.22  There are costs to foregoing a reasoned opinion that the testator, settlor, or parties contracting for arbitration of a will or trust dispute should consider.⁴⁷ The task of drafting a reasoned opinion may force the arbitrator to approach the arbitration hearing and process of arriving at a decision in a more disciplined, deliberate, and thoughtful manner. On the flip side of this coin, one might reasonably fear that the lack of a reasoned opinion will make it easier for an arbitrator to hide decision-maker bias. Relatedly, a reasoned opinion may increase the confidence of the losing party in the fairness of the arbitration process.

3.23  The relative finality of the arbitrator’s award is a prized feature of arbitration. Rule 46 of the AAA Wills and Trusts Arbitration Rules furthers the goal of finality by making clear that an arbitrator may not entertain a motion for reconsideration. Rule 46 allows a party to request, within twenty days of the arbitration award, that the arbitrator ‘correct any clerical, typographical, or computational errors in the award’.⁴⁸ The rule clarifies, however, that ‘[t]he arbitrator is not empowered to redetermine the merits of any claim already decided.’⁴⁹ This provision is consistent with the common law doctrine of functus officio, which provides that once an arbitrator has issued her final award she may not revisit the merits of the award.⁵⁰

3.24  The Rules also provide a ‘Standard Arbitration Clause’ which speaks to the finality of the arbitrator’s award.⁵¹ The Standard Arbitration Clause is provided as a model (p. 58) clause that a testator or settlor might include in her will or trust in an effort to require that future disputes relating to the will or trust be arbitrated.⁵² With respect to finality, the Standard Arbitration Clause provides, ‘[t]he arbitrator’s decision shall not be appealable to any court, but shall be final and binding on any and all persons who have or may have an interest in my estate or any trust under my will (or my trust), including unborn or incapacitated persons, such as minors or incompetents.’⁵³

3.25  It is difficult to know what to make of this provision of the clause. Perhaps the provision is meant only to convey that the arbitration award shall be considered final for the purposes of judicial confirmation or vacation of the award. If that is the intended meaning, the provision should be redrafted to state more clearly that narrow purpose.

3.26  If the provision is meant to provide for an ‘opt-out’ model of arbitration in which courts provide no review whatsoever following an arbitration award, then the provision would be both foolish and (fortunately) ineffective. Provision for such an opt-out model would be foolish because the model would have no mechanism to police even the worst abuses of the arbitral process. For example, assume an arbitration award that is beyond the scope of the arbitrator’s authority and that was procured through a bribe to the arbitrator: under a literal reading of the Standard Arbitration Clause, the award would be binding on the parties.

3.27  The opt-out model provision would be ineffective because it would be in conflict with the mechanics of arbitral award enforcement. An arbitrator has no power to enforce her own award. A party wishing to enforce the arbitration award must file a motion to confirm the award in state or federal court. The Federal Arbitration Act (FAA) provides that a party may apply for a court order affirming the award ‘at any time within one year after the award is made’ and that the court ‘must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11’ of the FAA.⁵⁴ Thus, the award confirmation process affords the losing party the opportunity to oppose confirmation of the award on the narrow grounds specified in Sections 10 and 11 of the FAA.⁵⁵ (p. 59) Section 10 of the FAA authorizes a court to vacate an arbitration award on four narrow grounds: fraud, arbitrator partiality, arbitrator misconduct in refusing to postpone a hearing or consider evidence, and excess of powers.⁵⁶ Section 11 of the FAA provides for judicial correction of the arbitration award in the case of a miscalculation in the award, an award ‘upon a matter not submitted to’ the arbitrator, and an award that is ‘imperfect in matter of form’.⁵⁷ These narrow grounds make it very difficult in practice for a losing party to move successfully to vacate an arbitration award.⁵⁸

3.28  In sum, a testator, settlor, or party contracting for will or trust arbitration would be wise to avoid incorporating the Standard Arbitration Clause’s language on the appeal of an arbitrator’s award. More sensible provisions relating to enforcement of the arbitration award that might be incorporated into a will, trust, or contract for arbitration of a will or trust dispute are found in the JAMS Comprehensive Arbitration Rules and Procedures. Rule 24(k) of the JAMS Rules provides, ‘[t]he Award is considered final, for purposes of … a judicial proceeding to enforce, modify or vacate the Award.’⁵⁹ Rule 25 of the JAMS Rules provides, ‘[p]roceedings to enforce, confirm, modify or vacate an Award will be controlled by and conducted in conformity with the Federal Arbitration Act, 9 U.S.C. Sec. 1, et seq., or applicable state law.’⁶⁰

3.29  The AAA Wills and Trusts Arbitration Rules contain two provisions likely to have a significant impact on the speed and efficiency of arbitration in a case in which a party seeks to avoid arbitration altogether. The first of these provisions is a ‘delegation clause’. The second of these provisions is an anti-waiver clause.

3.30  Rule 7(a) contains a broad delegation clause. This rule addresses the arbitrator’s jurisdiction and is critically important to furthering the goal of designing a prompt and economical dispute resolution process. Rule 7(a) provides, ‘[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement.’⁶¹ To gain a fuller appreciation of the importance of this provision, one must consider the related doctrines of arbitrability (in the domestic US sense) and separability.⁶²

3.31  Two primary issues of arbitrability arise when a party seeks to compel another to arbitrate their dispute. The first issue is whether the parties have entered into a valid arbitration agreement. If the parties have entered into a valid arbitration agreement, the question arises as to whether their instant dispute is within the scope of that arbitration agreement.⁶³

3.32  When a party raises either of these ‘gateway’ arbitrability issues, the default rule is that a court rather than an arbitrator gets to decide the issue.⁶⁴ The parties, however, may choose to opt out of the default. Thus, the parties may contract to assign these arbitrability questions to the arbitrator.⁶⁵ When deciding whether the parties have agreed to arbitrate arbitrability, a court will require ‘clear and unmistakable evidence that they did so’.⁶⁶ In announcing this rule, the US Supreme Court explained that the question of who should decide the arbitrability issue is an ‘arcane’ one that the parties most likely may not have thought about.⁶⁷ Thus, ‘given the principle that a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration’, a court will insist on clear and unmistakable evidence of an agreement to arbitrate the arbitrability issue so as not to mistakenly ‘force unwilling parties to arbitrate a matter they reasonably would have thought a judge, not an arbitrator, would decide’.⁶⁸

3.33  Rule 7(a) purports to assign to the arbitrator the arbitrability issues relating to ‘the existence, scope or validity of the arbitration agreement’.⁶⁹ Thus, this rule (p. 61) is intended to opt the parties out of the default rule that a court rather than an arbitrator gets to decide the existence and scope of an arbitration clause. As discussed immediately above, this delegation clause will be effective to switch this default only if a court finds that the parties’ adoption of the AAA Wills and Trusts Arbitration Rules constitutes clear and unmistakable evidence of an agreement to assign arbitrability to the arbitrator.

3.34  No court has considered the ‘clear and unmistakable evidence’ issue in a case involving the Wills and Trusts Arbitration Rules. Numerous courts, however, have considered whether the delegation clause in the AAA Commercial Arbitration Rules or the AAA Employment Arbitration Rules is effective to assign the arbitrability issue to the arbitrator. The delegation clause in the AAA Employment Arbitration Rules is identical to the delegation clause in the AAA Wills and Trusts Arbitration Rules.⁷⁰ The delegation clause in the AAA Commercial Arbitration Rules is nearly identical.⁷¹

3.35  The overwhelming consensus among courts that have considered the issue is that the parties’ agreement to incorporate the AAA arbitration rules into their arbitration agreement constitutes clear and unmistakable evidence that the parties have agreed to arbitrate arbitrability issues.⁷² Thus, where a testator, settlor, or contracting parties have adopted the AAA Wills and Trusts Arbitration Rules or have incorporated the Rules into their arbitration agreement, the arbitrator should have the authority to decide any challenge to the existence, scope, or validity of the arbitration agreement. In such a case, when a court is presented with a motion to compel arbitration, the court should do no more than ensure that the assertion of arbitrability is not ‘wholly groundless’ before sending the case to the arbitrator.⁷³ Moreover, in such a case, a court will review the arbitrator’s decisions on these arbitrability issues after the fact only under the extremely deferential standard of review applicable to arbitration awards.

(p. 62) 3.36  Rule 7(a)’s delegation clause also is relevant to the arbitration doctrine of separability.⁷⁴ The separability doctrine provides that an arbitration clause is separable from the contract in which the clause is found.⁷⁵ In essence, the arbitration clause is a contract within a contract. Thus, under the separability doctrine, where a party to a contract containing an arbitration clause challenges the validity of the container contract, the party is not challenging the arbitration clause found within the container contract.⁷⁶ In such a case, the arbitrator rather than the court has the authority to decide the challenge to the container contract.⁷⁷ Only if a party challenges the precise agreement to arbitrate will a court decide the challenge.⁷⁸

3.37  A delegation clause, such as that in Rule 7(a), alters this separability scheme to deprive a court of the ability to hear even a challenge that is specific to the arbitration agreement. In essence, like a Russian nesting doll,⁷⁹ the delegation clause is an arbitration contract within an arbitration contract within a container contract.⁸⁰ Thus, where a party challenges the validity or scope of an arbitration provision but does not specifically challenge the delegation provision, the arbitrator rather than a court has the authority to decide the challenge to the arbitration agreement. As the US Supreme Court explained in Rent-A-Center, West, Inc v Jackson,⁸¹ a delegation provision ‘is simply an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce’ and ‘unless [the party opposing arbitration] challenged the delegation provision specifically, we must treat it as valid under § 2 [of the Federal Arbitration Act], and must enforce it under §§ 3 and 4, leaving any challenge to the validity of the [arbitration] Agreement as a whole for the arbitrator’.⁸²

3.38  The AAA Wills and Trusts Arbitration Rules contain a broad anti-waiver provision. Rule 48(a) provides, ‘[n]o judicial proceeding by a party relating to the subject matter of the arbitration shall be deemed a waiver of the party’s right to arbitrate.’⁸³ An anti-waiver provision may be beneficial in expressing the parties’ intention that (p. 63) a court should not find waiver lightly.⁸⁴ Rule 48(a), however, is so overly broad that its demerits outweigh its merits.

3.39  This broad anti-waiver provision may encourage a party to an arbitration contract to litigate in court strategically as a prelude to arbitration. If it were enforceable, Rule 48(a)’s language would allow a party to take advantage of the typically broader discovery available in court before filing a demand for arbitration. Such a course of action would be antithetical to a prompt and economical dispute resolution process.

3.40  Unfortunately for the party who has litigated strategically in reliance upon Rule 48(a)’s broad anti-waiver provision, but fortunately for the party to an arbitration agreement who has been prejudiced by the other party’s litigation activity, courts generally have found the AAA’s broad anti-waiver provision not to be controlling. Several courts have interpreted the broad language in Rule 48(a), which is common to several sets of AAA arbitration rules,⁸⁵ as covering only a party’s resort to a court ‘to seek provisional remedies or other judicial proceedings that would not function to displace arbitration on the underlying dispute’.⁸⁶ More generally, courts have held that, notwithstanding the AAA’s broad anti-waiver provision, a court should engage in standard waiver analysis.⁸⁷ Thus, where a court finds that a party’s litigation activity meets the jurisdiction’s standard for waiver, the court will deem the party to have waived her right to arbitrate despite the AAA’s broad anti-waiver provision.⁸⁸ This approach (p. 64) is supported by the rationale that a court should not sanction the waste of scarce judicial resources.⁸⁹

3.41  Professor SI Strong has pointed out that ‘a non-waiver provision is particularly helpful in the trust context because parties in some jurisdictions may need to apply to the court for assistance with certain trust-related matters’ such as those associated with representation for absent parties.⁹⁰ Nonetheless, for the reasons set out earlier, a testator, settlor, or parties contracting for arbitration of will or trust disputes would be wise to opt out of Rule 48(a) and instead to incorporate a narrower anti-waiver provision into the will, trust, or arbitration contract. The CPR Administered Arbitration Rules provide a more sensible provision for adoption: ‘A request for interim measures by a party to a court shall not be deemed incompatible with the agreement to arbitrate or as a waiver of that agreement.’⁹¹

3.42  A principal virtue of arbitration is that it enables the parties to a dispute to select a decision-maker with expert knowledge relating to the matter in dispute. The expectation is that such expertise will lead to a more informed decision-making process. This expectation itself may result in even the losing party in arbitration having greater acceptance of and respect for the arbitrator’s award.

(p. 65) 3.43  In the context of a will or trust dispute, the testator, settlor, and parties to the dispute might desire a decision-maker with specialized knowledge of the procedural and substantive law of trusts and estates as well as the tax aspects of estate planning.⁹² The interested parties also might desire a decision-maker who is familiar with the testator’s or settlor’s values and, thus, possesses a fuller appreciation of how those values influenced the will or trust.⁹³ The hope is that the decision of an arbitrator with such an understanding of the testator’s or settlor’s values will be more likely to reflect the donative intent grounding the estate plan.⁹⁴

3.44  The AAA Wills and Trusts Arbitration Rules have several provisions designed to provide for the selection of an arbitrator with expertise in wills and trusts. First, the Standard Arbitration Clause provides, ‘[t]he arbitrator(s) shall be a practicing lawyer licensed to practice law in the state whose law governs my will (or my trust) and whose practice has been devoted primarily to wills and trusts or (sic) at least 10 years.’⁹⁵ Also, Rule 3 of the AAA Wills and Trusts Arbitration Rules provides, ‘[t]he AAA shall establish and maintain a Roster of Arbitrators … with knowledge of the Wills and Trusts area of law and practice.’⁹⁶ Moreover, Rule 11 provides for appointment of arbitrators from the Wills and Trusts Panel.⁹⁷

(p. 66) 3.45  Despite these provisions, it is not entirely clear that one who arbitrates under the AAA Wills and Trusts Arbitration Rules will have the benefits of an arbitrator with expertise in wills and trusts. A testator or settlor who provides in her will or trust for arbitration ‘in accordance with the AAA Wills and Trusts Arbitration Rules’ as a practical matter may have inadvertently selected the AAA’s Expedited Procedures or the AAA’s Procedures for Large, Complex Commercial Disputes to govern a particular dispute relating to her will or trust due to the provisions of Rule 1 of the AAA Wills and Trusts Arbitration Rules. That Rule provides that for any case involving only two parties and ‘in which no disclosed claim or counterclaim exceeds $75,000’, the AAA’s Expedited Procedures shall apply unless the parties agree otherwise.⁹⁸ In such a case, the AAA Wills and Trusts Arbitration Rules will apply only to the extent that they do not conflict with the Expedited Procedures.⁹⁹ Rule 1 further provides that for any case ‘in which the disclosed claim or counterclaim of any party is at least $500,000’, the AAA’s Procedures for Large, Complex Commercial Disputes shall apply unless the parties agree otherwise.¹⁰⁰ In such a case, the AAA Wills and Trusts Arbitration Rules will apply only to the extent that they do not conflict with the Procedures for Large, Complex Commercial Disputes.¹⁰¹ Thus, depending on the value of the claims asserted in the arbitration and the number of claimants and respondents in the arbitration, the AAA Wills and Trusts Arbitration Rules (exclusive of Rule 1) may or may not control.

3.46  Application of the Expedited Procedures or Procedures for Large, Complex Commercial Disputes in a will or trust arbitration may be problematic with respect to arbitrator selection. While Rules 3 and 11 of the AAA Wills and Trusts Rules speak of the appointment of an arbitrator or arbitrators ‘with knowledge of the Wills and Trusts area of law and practice’,¹⁰² neither the Expedited Procedures nor the Procedures for Large, Complex Commercial Disputes expressly provides for arbitrators with such expertise. Rule E-4 of the Expedited Procedures provides, ‘[t]he AAA shall simultaneously submit to each party an identical list of five proposed arbitrators drawn from its National Roster from which one arbitrator shall be appointed.’¹⁰³ Knowledge in the area of wills or trusts is not a prerequisite for appointment to the AAA’s National Roster of Arbitrators.¹⁰⁴ Rule L-2 of the Procedures for Large, Complex Commercial Disputes provides that if the parties are not able to agree on a method for appointment of the arbitrators, ‘the AAA shall appoint arbitrators from the Large, (p. 67) Complex Commercial Case Panel, in the manner provided in the Regular Commercial Arbitration Rules’.¹⁰⁵

3.47  One might reasonably expect that the AAA would submit to the parties in a will or trust arbitration only arbitrators with experience in the areas of wills and trusts. The Rules, however, do not guarantee this. As a precaution, any testator, settlor, or parties contracting for arbitration who provide for arbitration under the AAA Wills and Trusts Arbitration Rules should expressly limit application of Rule 1 so that the arbitration selection procedures in Rules 3 and 11 always trump the arbitrator selection procedures in the Expedited Procedures and the Procedures for Large, Complex Commercial Disputes.

3.48  By far the most serious shortcoming of the AAA Wills and Trusts Arbitration Rules is that the Rules are not sufficiently reflective of the nature of will and trust disputes. With respect to the 2009 version of the AAA Wills and Trusts Arbitration Rules, Professor Strong has remarked that ‘the overall impression is that the AAA has largely tracked other AAA rule sets without any regard to the unique nature of trust disputes’.¹⁰⁶ Professor Strong continues: ‘the AAA appears to be operating largely under the belief that trusts are just another type of business association and that standard arbitral procedures are sufficient to address any disputes arising under a trust.’¹⁰⁷ She has labelled these rules ‘entirely inadequate’ as ‘a highly specialized set of rules tailored specifically to the unique demands of trust arbitration’.¹⁰⁸ These same criticisms must be made of the current version of the Rules. Other than its provisions for selection of an arbitrator with expertise in wills and trusts, certain language in the Standard Arbitration Clauses providing that ‘questions regarding my competency, attempts to remove a fiduciary, or questions concerning the amount of bond of a fiduciary’ shall not be arbitrable,¹⁰⁹ and a rule providing for representation for incompetent and unborn parties,¹¹⁰ the Rules do not contain any provisions drafted especially for will or trust disputes.

(p. 68) 3.49  A second substantial shortcoming of the AAA Wills and Trusts Arbitration Rules is that the Rules make almost no distinction between a multi-billion dollar commercial trust and a family trust with a relatively small corpus.¹¹¹ The Rules do provide one Standard Arbitration Clause for Wills and Non-Commercial Trusts and a separate Standard Arbitration Clause for Commercial Trusts.¹¹² Also, the Rules do channel many disputes with only small value claims (not exceeding US$75,000) into a process governed by the AAA Expedited Procedures while channelling disputes with at least one large value claim (of at least US$500,000) into a process governed by the AAA Procedures for Large, Complex Commercial Disputes.¹¹³ For the most part, however, the AAA has designed model procedures that will apply the same rules to a family squabble over grandmother’s intent with respect to her modest estate as to a dispute between different classes of investors over the administration of a multi-billion dollar commercial trust. In trying to be all things to all trusts, the AAA Wills and Trusts Arbitration Rules prove suboptimal for lack of sufficient differentiation.

3.50  The nature of trusts and estates litigation is such that it will often be beneficial, if not essential, to consolidate actions or join entities not presently a party to an action.¹¹⁴ For example, a trust beneficiary may be a required party to an action interpreting the trust if her absence might impair her ability to protect her interests in the trust or might lead to an inconsistent ruling in later litigation.¹¹⁵ Thus, it is notable that that AAA Wills and Trusts Arbitration Rules do not contain any provision that addresses the authority of the AAA or an arbitrator to consolidate cases or to join parties or that provides for the mechanics of doing so.¹¹⁶

(p. 69) 3.51  The testator, settlor, or parties selecting arbitration, therefore, may want to provide in the will, trust, or arbitration agreement for the consolidation of actions and the joinder of absent parties.¹¹⁷ The JAMS Comprehensive Arbitration Rules contain provisions expressly governing consolidation and joinder that would be suitable for incorporation into the will, trust, or arbitration agreement. JAMS Rule 6(e) provides, ‘[u]nless the Parties’ Agreement or applicable law provides otherwise, JAMS, if it determines that the Arbitrations so filed have common issues of fact or law, may consolidate Arbitrations in [certain specified] instances.’¹¹⁸ Moreover, JAMS Rule 6(f) authorizes an arbitrator to grant a third party’s request to participate in an already pending arbitration and also empowers the arbitrator to grant the request of a party to a pending arbitration to compel a third party to participate in the arbitration.¹¹⁹

3.52  As noted earlier, the AAA Wills and Trusts Arbitration Rules expressly recognize that incompetent and unborn persons may need representation in an arbitration of a will or trust dispute. Rule 23 provides, ‘[t]he Arbitrator shall have the discretion to determine whether representation, such as a guardian ad litem, is required to preserve the interests of unrepresented, incompetent, and unborn parties.’¹²⁰ The arbitrator’s authority to appoint a representative for such an incompetent or unborn party is not expressed in the Rules, but arguably should be implied.

3.53  One entity whose interests the Rules largely overlook is the testator/settlor. This oversight is ironic given that it is likely to have been the testator/settlor who selected the Rules for application in the first place. The Rules arguably allow the parties to the dispute to override the testator/settlor’s choices with respect to application of the Rules and selection of an arbitrator.¹²¹

3.54  Rule 1 of the AAA Wills and Trusts Arbitration Rules provides, ‘[t]he parties, by written agreement, may vary the procedures set forth in these Rules.’¹²² Given that a will is not effective until after the death of the testator, it is certain that the testator will not be a party to an arbitration under her will. Depending on the (p. 70) circumstances, a settlor may or may not be a party to an arbitration under her trust. Thus, by written agreement, the parties to an arbitration under the will or trust may be able to override the procedures selected by the testator or settlor to govern arbitration of disputes relating to her will or trust.

3.55  Of particular concern, the method provided in the Rules for the appointment of the arbitrator seems to discount the possibility that the testator or settlor may have wished to influence the appointment of the arbitrator. Rule 11 provides for the appointment of the arbitrator from the Wills and Trusts Panel in a specified manner ‘[i]f the parties have not appointed an arbitrator and have not provided any other method of appointment.’¹²³ Moreover, Rule 11 further provides, ‘[u]nless the parties agree otherwise,’ whenever there are two or more claimants or two or more respondents in the arbitration, ‘the AAA may appoint all the arbitrators.’¹²⁴ Rule 12 provides, with respect to direct appointment of the arbitrators by the parties, ‘[i]f the agreement of the parties names an arbitrator or specifies a method of appointing an arbitrator, the designation or method shall be followed.’¹²⁵ Given that the testator will not and the settlor may not be a party to the arbitration, it is not clear from the Rules whether a provision in the will or trust intended to govern the appointment of arbitrators would trump Rules 11 and 12. Indeed, the drafters of the AAA Wills and Trusts Arbitration Rules appear to have lifted the language quoted earlier from Rules 1, 11, and 12 almost verbatim from Rules 1, 12, and 13 respectively of the AAA Commercial Arbitration Rules, seemingly without any consideration of the relevance of a testator/settlor’s intent in an arbitration of a dispute concerning her will or trust.¹²⁶

3.56  The Standard Arbitration Clause for Wills and Non-Commercial Trusts seems to conflict with AAA Wills and Trusts Arbitration Rule 7(b) with respect to the types of claims that the arbitrator shall have the power to determine. In short, the former is most plausibly read as excluding from the scope of the arbitration clause any claim challenging the validity of the will or trust. To the contrary, Rule 7(b) expressly grants to the arbitrator the authority to determine any claim challenging the validity of the will or trust. From this apparent conflict, one might conclude that the drafters borrowed Rule 7(b) from the AAA Commercial Arbitration Rules without regard for the wills- and trusts-related concerns that motivated the limiting language that the drafters included in the Standard Arbitration Clause.

3.57  The Standard Arbitration Clause speaks of requiring arbitration of any ‘dispute regarding the interpretation of my will (or my trust) or the administration of my (p. 71) estate or any trust under my will (or my trust)’.¹²⁷ Thus, the Standard Arbitration Clause does not seem to contemplate arbitration of a challenge to the validity of the will or trust. Moreover, the Standard Arbitration Clause expressly excludes one type of validity challenge—‘questions regarding [the testator or settlor’s] competency’—from the scope of the arbitration clause.¹²⁸ The exclusion of validity challenges is most likely purposeful and is likely grounded in a concern that those who seek to challenge the validity of a will or trust may not be bound to the arbitration clause in the will or trust.

3.58  The extent to which an arbitration clause in a will or trust may force a beneficiary to arbitrate her claim concerning the will or trust remains unresolved in most jurisdictions.¹²⁹ A consensus has begun to develop in the case law and the statutory reform movement, however, indicating that a beneficiary should not be bound by the arbitration clause in a will or trust where the beneficiary does not seek to take under the will or trust.¹³⁰ The Standard Arbitration Clause’s exclusion of validity challenges from the scope of the arbitration clause is broader than this consensus would require in that the clause would exclude a claim by a beneficiary who challenges a part of the will or trust while seeking to take under another part of the will or trust.

3.59  The narrow scope of the Standard Arbitration Clause arguably is in conflict with the broad scope of arbitrability provided for in Rule 7(b). That rule states in part, (p. 72) ‘[t]he arbitrator shall have the power to determine the existence or validity of a trust or will in which an arbitration clause forms a part.’¹³¹ It may be that this provision was intended merely to provide for a separability scheme so that a challenge to the will or trust as a whole will not be deemed a challenge to the arbitration provision that might divest the arbitrator of her authority to address a claim relating to the interpretation of the will or trust or administration of the estate or trust. Indeed, Rule 7(b) continues, ‘Such an arbitration clause shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitrator that the contract is null and void shall not for that reason alone render invalid the arbitration clause.’¹³² Regardless, on its face, the first sentence of Rule 7(b) gives the arbitrator the authority to decide claims that the Standard Arbitration Clause states that the arbitrator does not have the authority to decide. That conflict seems likely to breed litigation over the intended scope of the arbitration provision.

3.60  The drafters of the AAA Wills and Trusts Arbitration Rules appear to have borrowed Rule 7(b) from Rule 7(b) of the AAA Commercial Arbitration Rules. The two provisions are identical except that the former, in the first sentence of the rule, replaces the phrase ‘contract of which an arbitration clause forms a part’ with the phrase ‘trust or will in which an arbitration clause forms a part’.¹³³ Indeed, the remaining two sentences in Rule 7(b) of the Wills and Trusts Arbitration Rules, in language that is copied verbatim from Rule 7(b) of the AAA Commercial Arbitration Rules, speak of the arbitration clause as being located in a larger ‘contract’ rather than as being located in a trust or will.¹³⁴

3.61  The Standard Arbitration Clause in the AAA Commercial Arbitration Rules provides, ‘[a]ny controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by arbitration.’¹³⁵ Thus, unlike the Standard Arbitration Clause in the AAA Wills and Trusts Arbitration Rules, the Standard Arbitration Clause in the AAA Commercial Arbitration Rules is not limited to disputes regarding interpretation or administration and does not exclude claims regarding competency. Rule 7(b), therefore, does not conflict with the Standard Arbitration Clause in the AAA Commercial Arbitration Rules. The drafters of the AAA Wills and Trusts Arbitration Rules seem not to have realized, however, that when borrowing Rule 7(b) for the AAA Wills and Trusts Arbitration Rules they needed to take account of the wills- and trusts-related concerns that motivated the limiting language in the Standard Arbitration Clause in the AAA Wills and Trusts Arbitration Rules and needed to harmonize the rule with the Standard Arbitration Clause in the AAA Wills and Trusts Arbitration Rules.

(p. 73) 3.62  Indeed, more generally, the AAA Wills and Trusts Arbitration Rules, considered as a whole, support a suspicion that the drafters did not think carefully enough about the ways in which will and trust disputes and litigation differ from commercial disputes and litigation. The oversight that is reflected in the apparent conflict between Rule 7(b) and the Standard Arbitration Clause in the AAA Wills and Trusts Arbitration Rules is symptomatic of the greater shortcoming—that the Rules do not sufficiently take account of the nature of will and trust disputes. Thus, a testator, settlor, or parties to a contract for will or trust arbitration who consider adopting the AAA Wills and Trusts Arbitration Rules must give careful thought to modifying the Rules to better meet the needs of the potential will or trust dispute.

3.63  This chapter has suggested ways in which adopters might vary the procedures set forth in the Rules better to serve the interests of a testator, settlor, or parties arbitrating a will or trust dispute. The ability to contract around the oversights and shortcomings of the AAA Wills and Trusts Arbitration Rules, however, is not a panacea. Ad hoc drafting, especially when it is extensive, incurs the risk of litigation over the meaning of the customized provisions.¹³⁶ Indeed, a presumed virtue of adopting an arbitral organization’s rules of arbitration procedure is that the rules will have been utilized by others extensively over time and their meaning will have become settled. Thus, the AAA itself should form a study group to analyse the nature of will and trust disputes and to recommend arbitration procedures best suited to that particular nature. The AAA should then revise the AAA Wills and Trusts Arbitration Rules accordingly.