Appendix II to Subpart V of Part 85 - Arbitration Rules
40:220.127.116.11.18.104.22.168.52 : Appendix II
Appendix II to Subpart V of Part 85 - Arbitration Rules Part A -
Pre-Hearing Section 1: Initiation of Arbitration
Either party may commence an arbitration under these rules by
filing at any regional office of the American Arbitration
Association (the AAA) three copies of a written submission to
arbitrate under these rules, signed by either party. It shall
contain a statement of the matter in dispute, the amount of money
involved, the remedy sought, and the hearing locale requested,
together with the appropriate administrative fee as provided in the
Administrative Fee Schedule of the AAA in effect at the time the
arbitration is filed. The filing party shall notify the MOD
Director in writing within 14 days of when it files for arbitration
and provide the MOD Director with the date of receipt of the bill
by the part manufacturer.
Unless the AAA in its discretion determines otherwise and no
party disagrees, the Expedited Procedures (as described in Part E
of these Rules) shall be applied in any case where no disclosed
claim or counterclaim exceeds $32,500, exclusive of interest and
arbitration costs. Parties may also agree to the Expedited
Procedures in cases involving claims in excess of $32,500.
All other cases, including those involving claims not in excess
of $32,500 where either party so desires, shall be administered in
accordance with Parts A through D of these Rules.
Section 2: Qualification of Arbitrator
Any arbitrator appointed pursuant to these Rules shall be
neutral, subject to disqualification for the reasons specified in
Section 6. If the parties specifically so agree in writing, the
arbitrator shall not be subject to disqualification for said
The term “arbitrator” in these rules refers to the arbitration
panel, whether composed of one or more arbitrators.
Section 3: Direct Appointment by Mutual Agreement of Parties
The involved manufacturers should select a mutually-agreeable
arbitrator through which they will resolve their dispute. This step
should be completed within 90 days from the date of receipt of the
warranty claim bill by the part manufacturer.
Section 4: Appointment From Panel
If the parties have not appointed an arbitrator and have not
provided any other method of appointment, the arbitrator shall be
appointed in the following manner: 90 days from the date of receipt
of the warranty claim bill by the part manufacturer, the AAA shall
submit simultaneously to each party to the dispute an identical
list of names of persons chosen from the National Panel of
Commercial Arbitrators, established and maintained by the AAA.
Each party to the dispute shall have ten days from the mailing
date in which to cross off any names objected to, number the
remaining names in order of preference, and return the list to the
AAA. If a party does not return the list within the time specified,
all persons named therein shall be deemed acceptable. From among
the persons who have been approved on both lists, and in accordance
with the designated order of mutual preference, the AAA shall
invite the acceptance of an arbitrator to serve. If the parties
fail to agree on any of the persons named, or if acceptable
arbitrators are unable to act, or if for any other reason the
appointment cannot be made from the submitted lists, the AAA shall
have the power to make the appointment from among other members of
the panel without the submission of additional lists.
Section 5: Number of Arbitrators; Notice to Arbitrator of
The dispute shall be heard and determined by one arbitrator,
unless the AAA in its discretion, directs that a greater number of
arbitrators be appointed.
Notice of the appointment of the arbitrator shall be mailed to
the arbitrator by the AAA, together with a copy of these rules, and
the signed acceptance of the arbitrator shall be filed with the AAA
prior to the opening of the first hearing.
Section 6: Disclosure and Challenge Procedure
Any person appointed as an arbitrator shall disclose to the AAA
any circumstance likely to affect impartiality, including any bias
or any financial or personal interest in the result of the
arbitration or any past or present relationship with the parties or
their representatives. Upon receipt of such information from the
arbitrator or another source, the AAA shall communicate the
information to the parties and, if it deems it appropriate to do
so, to the arbitrator and others. Upon objection of a party to the
continued service of an arbitrator, the AAA shall determine whether
the arbitrator should be disqualified and shall inform the parties
of its decision, which shall be conclusive.
Section 7: Vacancies
If for any reason an arbitrator should be unable to perform the
duties of the office, the AAA may, on proof satisfactory to it,
declare the office vacant. Vacancies shall be filled in accordance
with the applicable provisions of these rules.
In the event of a vacancy in a panel of arbitrators after the
hearings have commenced, the remaining arbitrator or arbitrators
may continue with the hearing and determination of the controversy,
unless the parties agree otherwise.
Section 8: Interpretation and Application of Rules
The arbitrator shall interpret and apply these rules insofar as
they relate to the arbitrator's powers and duties. When there is
more than one arbitrator and a difference arises among them
concerning the meaning or application of these rules, it shall be
decided by a majority vote. If that is unobtainable, either an
arbitrator or a party may refer the question to the AAA for final
decision. All other rules shall be interpreted and applied by the
Section 9: Administrative Conference and Preliminary Hearing
At the request of any party or at the discretion of the AAA, an
administrative conference with the AAA and the parties and/or their
representatives will be scheduled in appropriate cases to expedite
the arbitration proceedings.
In large or complex cases, at the request of any party or at the
discretion of the arbitrator or the AAA, a preliminary hearing with
the parties and/or their representatives and the arbitrator may be
scheduled by the arbitrator to specify the issues to be resolved,
stipulate to uncontested facts, and to consider any other matters
that will expedite the arbitration proceedings. Consistent with the
expedited nature of arbitration, the arbitrator may, at the
preliminary hearing, establish (i) the extent of and the schedule
for the production of relevant documents and other information,
(ii) the identification of any witnesses to be called, and (iii) a
schedule for further hearings to resolve the dispute.
Section 10: Fixing of Locale
The parties may mutually agree on the locale where the
arbitration is to be held. If any party requests that the hearing
be held in a specific locale and the other party files no objection
thereto within ten days after notice of the request has been mailed
to it by the AAA, the locale shall be the one requested. If a party
objects to the locale requested by the other party, the AAA shall
have the power to determine the locale and its decision shall be
final and binding.
Part B - The Hearing Section 1: Date, Time, and Place of Hearing
The arbitrator shall set the date, time, and place for each
hearing. The AAA shall mail to each party notice thereof at least
ten days in advance, unless the parties by mutual agreement waive
such notice or modify the terms thereof.
Section 2: Representation
Any party may be represented by counsel or other authorized
representative. A party intending to be so represented shall notify
the other party and the AAA of the name and address of the
representative at least three days prior to the date set for the
hearing at which that person is first to appear. When such a
representative initiates an arbitration or responds for a party,
notice is deemed to have been given.
Section 3: Attendance at Hearings
The arbitrator shall maintain the privacy of the hearings unless
the law provides to the contrary. Representatives of the MOD
director, and any persons having a direct interest in the
arbitration are entitled to attend hearings. The arbitrator shall
otherwise have the power to require the exclusion of any witness,
other than a party or other essential person, during the testimony
of any other witness. It shall be discretionary with the arbitrator
to determine the propriety of the attendance of any other
Section 4: Oaths
Before proceeding with the first hearing, each arbitrator may
take an oath of office and, if required by law, shall do so. The
arbitrator may require witnesses to testify under oath administered
by any duly qualified person and, if it is required by law or
requested by any party, shall do so.
Section 5: Majority Decision
All decisions of the arbitrators must be by a majority. The
award must also be made by a majority.
Section 6: Order of Proceedings and Communication with Arbitrator
A hearing shall be opened by the filing of the oath of the
arbitrator, where required; by the recording of the date, time, and
place of the hearing, and the presence of the arbitrator, the
parties and their representatives, if any; and by the receipt by
the arbitrator of the statement of the claim and the answering
statement, if any.
The arbitrator may, at the beginning of the hearing, ask for
statements clarifying the issues involved. In some cases, part or
all of the above will have been accomplished at the preliminary
hearing conducted by the arbitrator pursuant to Part A Section 9 of
The complaining party shall then present evidence to support its
claim. The defending party shall then present evidence supporting
its defense. Witnesses for each party shall submit to questions or
other examination. The arbitrator has the discretion to vary this
procedure but shall afford a full and equal opportunity to all
parties for the presentation of any material and relevant
Exhibits, when offered by either party, may be received in
evidence by the arbitrator.
The names and addresses of all witnesses and a description of
the exhibits in the order received shall be made a part of the
There shall be no direct communication between the parties and
an arbitrator other than at oral hearing, unless the parties and
the arbitrator agree otherwise. Any other oral or written
communication from the parties to the neutral arbitrator shall be
directed to the AAA for transmittal to the arbitrator.
Section 7: Evidence
The parties may offer such evidence as is relevant and material
to the dispute and shall produce such evidence as the arbitrator
may deem necessary to an understanding and determination of the
dispute. An arbitrator or other person authorized by law to
subpoena witnesses or documents may do so upon the request of any
party or independently.
The arbitrator shall be the judge of the relevance and
materiality of the evidence offered, and conformity to legal rules
of evidence shall not be necessary. All evidence shall be taken in
the presence of all of the arbitrators and all of the parties,
except where any of the parties is absent, in default, or has
waived the right to be present.
Section 8: Evidence by Affidavit and Post-hearing Filing of
Documents or Other Evidence
The arbitrator may receive and consider the evidence of
witnesses by affidavit, but shall give it only such weight as the
arbitrator deems it entitled to after consideration of any
objection made to its admission.
If the parties agree or the arbitrator directs that documents or
other evidence be submitted to the arbitrator after the hearing,
the documents or other evidence shall be filed with the AAA for
transmission to the arbitrator. All parties shall be afforded an
opportunity to examine such documents or other evidence.
Section 9: Closing of Hearing
The arbitrator shall specifically inquire of all parties whether
they have any further proofs to offer or witnesses to be heard.
Upon receiving negative replies or if satisfied that the record is
complete, the arbitrator shall declare the hearing closed and a
minute thereof shall be recorded. If briefs are to be filed, the
hearing shall be declared closed as of the final date set by the
arbitrator for the receipt of briefs. If documents are to be filed
as provided for in Part B Section 9 and the date set for their
receipt is later than that set for the receipt of briefs, the later
date shall be the date of closing the hearing. The time limit
within which the arbitrator is required to make the award shall
commence to run, in the absence of other agreements by the parties,
upon the closing of the hearing.
Section 10: Reopening of Hearing
The hearing may be reopened on the arbitrator's initiative, or
upon application of a party, at any time before the award is made.
The arbitrator may reopen the hearing and shall have 30 days from
the closing of the reopened hearing within which to make an
Section 11: Waiver of Oral Hearing
The parties may provide, by written agreement, for the waiver of
Section 12: Waiver of Rules
Any party who proceeds with the arbitration after knowledge that
any provision or requirement of these rules has not been complied
with and who fails to state an objection thereto in writing, shall
be deemed to have waived the right to object.
Section 13: Extensions of Time
The parties may modify any period of time by mutual agreement.
The AAA or the arbitrator may for good cause extend any period of
time established by these rules, except the time for making the
award. The AAA shall notify the parties of any extension.
Section 14: Serving of Notice
Each party shall be deemed to have consented that any papers,
notices, or process necessary or proper for the initiation or
continuation of an arbitration under these rules; for any court
action in connection therewith; or for the entry of judgment on any
award made under these rules may be served on a party by mail
addressed to the party or its representative at the last known
address or by personal service, inside or outside the state where
the arbitration is to be held, provided that reasonable opportunity
to be heard with regard thereto has been granted to the party.
The AAA and the parties may also use facsimile transmission,
telex, telegram, or other written forms of electronic communication
to give the notices required by these rules.
Part C - Award and Decision Section 1: Time of Award
The award shall be made promptly by the arbitrator and, unless
otherwise agreed by the parties or specified by law, no later than
30 days from the date of closing the hearing, or, if oral hearings
have been waived, from the date of the AAA's transmittal of the
final statements and proofs to the arbitrator.
Section 2: Form of Award
The award shall be in writing and shall be signed by the
arbitrator, or if a panel is utilized, a majority of the
arbitrators. It shall be accompanied by a written decision which
sets forth the reasons for the award. Both the award and the
decision shall be filed by the arbitrator with the MOD
Section 3: Scope of Award
The arbitrator may grant to the vehicle manufacturer any repair
expenses that he or she deems to be just and equitable.
Section 4: Award upon Settlement
If the parties settle their dispute during the course of the
arbitration, the arbitrator may set forth the terms of the agreed
settlement in an award. Such an award is referred to as a consent
award. The consent award shall be filed by the arbitrator with the
Section 5: Delivery of Award to Parties
Parties shall accept as legal delivery of the award, the placing
of the award, or a true copy thereof in the mail addressed to a
party or its representative at the last known address, personal
service of the award, or the filing of the award in any other
manner that is permitted by law.
Section 6: Release of Documents for Judicial Proceedings
The AAA shall, upon the written request of a party, furnish to
the party, at its expense, certified copies of any papers in the
AAA's possession that may be required in judicial proceedings
relating to the arbitration.
Part D - Fees and Expenses Section 1: Administrative Fee
The AAA shall be compensated for the cost of providing
administrative services according to the AAA Administrative Fee
Schedule and the AAA Refund Schedule. The Schedules in effect at
the time the demand for arbitration or submission agreement is
received shall be applicable.
The administrative fee shall be advanced by the initiating party
or parties, subject to final allocation at the end of the case.
When a claim or counterclaim is withdrawn or settled, the refund
shall be made in accordance with the Refund Schedule. The AAA may,
in the event of extreme hardship on the part of any party, defer or
reduce the administrative fee.
Section 2: Expenses
The loser of the arbitration is liable for all arbitration
expenses unless determined otherwise by the arbitrator.
Section 3: Arbitrator's Fee
An arrangement for the compensation of an arbitrator shall be
made through discussions by the parties with the AAA and not
directly between the parties and the arbitrator. The terms of
compensation of arbitrators on a panel shall be identical.
Section 4: Deposits
The AAA may require the parties to deposit in advance of any
hearings such sums of money as it deems necessary to defray the
expense of the arbitration, including the arbitrator's fee, if any,
and shall render an accounting to the parties and return any
unexpended balance at the conclusion of the case.
Part E - Expedited Procedures Section 1: Notice by Telephone
The parties shall accept all notices from the AAA by telephone.
Such notices by the AAA shall subsequently be confirmed in writing
to the parties. Should there be a failure to confirm in writing any
notice hereunder, the proceeding shall nonetheless be valid if
notice has, in fact, been given by telephone.
Section 2: Appointment and Qualifications of Arbitrator
The AAA shall submit simultaneously to each party an identical
list of five proposed arbitrators drawn from the National Panel of
Commercial Arbitrators, from which one arbitrator shall be
Each party may strike two names from the list on a preemptory
basis. The list is returnable to the AAA within seven days from the
date of the AAA's mailing of the list to the parties.
If for any reason the appointment of an arbitrator cannot be
made from the list, the AAA may make the appointment from among
other members of the panel without the submission of additional
The parties will be given notice by the AAA by telephone of the
appointment of the arbitrator, who shall be subject to
disqualification for the reasons specified in Part A, Section 6.
The parties shall notify the AAA, by telephone, within seven days
of any objection to the arbitrator appointed. Any objection by a
party to the arbitrator shall be confirmed in writing to the AAA
with a copy to the other party or parties.
Section 3: Date, Time, and Place of Hearing
The arbitrator shall set the date, time, and place of the
hearing. The AAA will notify the parties by telephone, at least
seven days in advance of the hearing date. Formal Notice of Hearing
will be sent by the AAA to the parties and the MOD Director.
Section 4: The Hearing
Generally, the hearing shall be completed within one day, unless
the dispute is resolved by the submission of documents. The
arbitrator, for good cause shown, may schedule an additional
hearing to be held within seven days.
Section 5: Time of Award
Unless otherwise agreed by the parties, the award shall be
rendered not later than 14 days from the date of the closing of the
Section 6: Applicability of Rules
Unless explicitly contradicted by the provisions of this part,
provisions of other parts of the Rules apply to proceedings
conducted under this part.
[54 FR 32593, Aug. 8, 1989, as amended at 70 FR 40432, July 13,