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Arbitration rule amendments streamline NFA's dispute resolution process

Several amendments to NFA's Code of Arbitration and Member Arbitration Rules (collectively referred to as the "arbitration rules") became effective March 1, 2002. These amendments shorten the arbitration timetable and modify other procedures to expedite the process for small claims. They also provide for a pre-hearing conference in cases with oral hearings and impose an arbitration service fee on respondents named in cases with oral hearings.

"We periodically review our arbitration rules to make sure that the program is operating efficiently," says Heather Cook, NFA's manager of arbitration. "These new amendments are the result of our most recent review."

One of the rule amendments simplifies the process for summary proceedings. Previously, NFA processed all arbitration cases in essentially the same way, regardless of the claim amount or proceeding type. However, cases that qualify for summary proceedings are usually simpler and less complicated than those that require an oral hearing. Therefore, the rule amendments provide for shorter Answer and discovery deadlines, as well as other simplified procedures.

"This amendment will result in a more efficient process for smaller claims, greatly benefiting all the parties involved in a summary proceeding " says Cook.

Another area of the arbitration process addressed by the rule amendments is the pre-hearing conference. Previously, arbitrators could hold a discovery conference but were limited to certain issues, such as discovery motions. Arbitrators will now be able to hold a pre-hearing conference where they may, among other things, resolve discovery issues, identify other pre-hearing motions and schedule hearing dates. The conference can be held shortly after the discovery deadlines pass, giving the arbitrators the opportunity to resolve more issues earlier in the arbitration process. Because NFA will pay the arbitrators to conduct pre-hearing conferences, NFA will charge respondents an arbitration service fee for cases that require an oral hearing. The fee must be remitted when the respondents file their Answer in a case. The service fee is required only for Answers filed in customer cases over $25,000 and in Member cases over $50,000. The fee for an Answer filed in a three-arbitrator case is $675 and $275 in a one-arbitrator case.

In an effort to encourage earlier settlements, NFA has changed its policy for refunding fees. NFA will issue a full refund of the hearing and arbitration service fees if a case settles or is withdrawn at least five days before the pre-hearing conference, if one is scheduled, or at least 30 days before the regular hearing if no pre-hearing conference is scheduled. NFA will also issue a full refund of the hearing fees for a summary proceeding that settles or is withdrawn at least 15 days before the scheduled summary proceeding.

"In addition, we will issue partial refunds of the hearing fee and arbitration service fee if a case settles or is withdrawn at least 15 days before the oral hearing date," says Cook.

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