Arbitration
Civil court lawsuits and trials are the traditional method for resolving disputes. However, concerns about court congestion and delays, rising litigation costs, and the negative psychological and emotional impact of litigation have increased the use of alternative dispute resolution (“ADR”) techniques of mediation and arbitration.
Arbitration is one of the more frequently used ADR processes. For anyone considering the use of arbitration, it is important to understand how the process works in the context of what they want to accomplish.
How Arbitration Works
Arbitration is a private process where disputing parties agree that I can make a decision about the dispute after receiving evidence and hearing arguments. Arbitration is different from mediation because I have the authority to make a decision about the dispute.
The arbitration process is similar to a trial in that the parties make opening statements and present evidence to me. Compared to traditional trials, arbitration can usually be completed more quickly and is less formal. For example, often the parties do not have to follow state or federal rules of evidence
After the hearing, I issue an award within 30 days of the hearing or after receiving post-hearing briefs. Some awards simply announce the decision (a “bare bones” award), and others give reasons (a “reasoned” award), depending on what the parties request. If one party requests a reasoned decision, I will make a reasoned award.
The arbitration process may be either binding or non-binding. When arbitration is binding, the decision is final, can be enforced by a court, and can only be appealed on very narrow grounds. When arbitration is non-binding, my award is advisory and can be final only if accepted by the parties.
The Benefits of Arbitration
Arbitration is the most formal alternative to litigation. In this process, the disputing parties present their case to me and I render a decision. Arbitration is widely used to resolve disputes in both the private and public sector. Parties may be able to keep and receive records of the proceedings and/or to keep such records entirely confidential. A trial in a courtroom is a public matter, and not confidential.
Arbitration is generally considered a more efficient process than litigation because it is quicker, less expensive, and provides greater flexibility of process and procedure. The parties often select the arbitrator and exercise control over certain aspects of the arbitration procedure. I typically have more expertise in the specific subject matter of the dispute than do judges because I am selected based upon my experience with the type of dispute; judges are assigned cases randomly, and on a wider variety of topics. I also have greater flexibility in decision-making.
The Arbitration Process
Typically, a party initiates the arbitration process by sending the other party a written demand for arbitration. The demand generally describes the parties, the dispute, and the type of relief sought. The opposing party usually responds in writing, indicating whether they believe the dispute is arbitrable. If the dispute is arbitrable, the parties then select an arbitrator or panel of arbitrators.
The format for arbitration is similar to a trial. The parties make opening and closing arguments, present testimony and witnesses, and offer documents. Sometimes, parties submit post-hearing briefs before a decision is made. The Process ends with an award, or decision.
One of the reasons that arbitration is often thought of as quicker and cheaper than litigation is that the paperwork involved in a dispute is cut down sharply when compared to litigation. The procedures for many arbitrations cut down sharply on some of the burdensome and expensive litigation tools collectively known as “discovery”. The discovery process is intended to allow for exchanges of documents and evidence between parties in a dispute. However, this can often lead to costly and time-consuming disputes, with mountains of paperwork. The arbitration process usually cuts down significantly on discovery, allowing me to take a more active role and possibly curtail excesses.
