What is arbitration?
Arbitration is a process in which each person in a dispute presents his/her case before an impartial person or panel of neutral arbitrators, who are professionals trained to evaluate disagreements and then render a decision or award. The parties agree to arbitrate either from a contractual relationship of the parties prior to their dispute, in which they agreed that any disputes arising under their contract will be settled by arbitration, or from a separate arbitration agreement entered into by disputing parties who want to avoid the expense, delay, risk and publicity of courtroom litigation. The parties can structure their arbitration agreement the way they want it and can control the scope of the arbitrator’s authority.
Is the decision rendered in arbitration legally binding?
Most arbitrations are binding, as most parties choose arbitration because they seek a quicker, less expensive and final end to their dispute. However, if the parties so agree, their arbitration can be non-binding. Then the arbitrator’s decision serves as a basis for the parties’ further settlement negotiations. Also, arbitration can be conditionally binding, if the parties agree. For example, some larger commercial enterprises agree that if the company is not satisfied with the decision, it is still binding; but if the customer is not satisfied and wants to pursue other remedies, it is not binding.
Is arbitration affordable?
Arbitration is not as expensive as litigation, unless the arbitrating parties agree to unlimited discovery and legal motions. With arbitration, the parties usually save time, energy and expense associated with prolonged conflict and litigation.
Should I have an attorney represent me in arbitration?
This often depends on the complexity of the matter, whether the other party is represented by counsel, the amount in dispute or the subject matter of the dispute. Generally speaking, it is probably not advisable to arbitrate a matter without counsel if the other party has counsel. Arbitrators generally do not advise parties on how to present their cases.
What are the benefits of arbitration?
- Reduced Costs.
A small case, for example, may be decided on the basis of submitted documents alone, which can reduce costs significantly.
- Efficiency and Speed of Decisions.
Some court dockets have two or more years of waiting time.
- Decision at Certain Time.
Arbitration can ensure that a definitive decision will be rendered within the time period established by the parties, which is not true for litigation.
- Convenient Hearing Dates.
Because arbitration hearings are scheduled according to the availability of the parties, hearing dates are convenient and conflict-free.
- Ability to Select an Arbitrator with Specific Expertise or Background.
- Reduced Risk.
Avoiding the risk of erratic jury verdicts and awards can be a substantial benefit. Some juries have made their decision based solely on the defendant's name. A legally-trained and knowledgeable arbitrator can be relied upon to base a decision on the facts and the law, not some extraneous prejudicial factor.
- Privacy and Confidentiality.
Arbitrations are held in private and are confidential, unless the parties agree otherwise.
- Finality and Enforceability.
Arbitration decisions are generally not appealable.
- Preservation of Business Relationships.
Arbitrations are usually less heated than a trial and can result in a more creative award that may not terminate a business relationship. Also, arbitration enables the parties to obtain a decision without waiting for years while the dispute festers. The quick decision can do a lot to preserve a relationship.
- Simpler and Less Legalistic than a Trial.
While arbitrators must apply the law, arbitrations are usually conducted without all the discovery processes and many motions and objections found in the courtroom.
- Playing Field Leveled.
An arbitrator generally has more flexibility in the hearing process and can accommodate having one party without a lawyer and/or one party having significantly smaller resources than the other. While the arbitrator’s job is not to tell a party how to make his case, arbitrators often ask questions of their own to determine the truth much more than judges do.
How do I choose an arbitrator?
The single most important factor in choosing an arbitrator is to pick one who is neutral--who has no significant relationship with either party. Arbitrators are usually chosen because of their character and integrity and for knowledge of the business from which the controversy arises. Unless the agreement to arbitrate provides otherwise, an arbitrator need not be an expert in the field on which the dispute is based.