Arbitration involves a process whereby contending parties agree voluntarily to submit a dispute to a neutral party for decision and agree to comply with the decision. Arbitration can be binding or non-binding based upon party requests or contract requirements.
Arbitration is often times preferred to litigation because the process can limit discovery and parties can set their own rules for presenting evidence.
Parties are compelled by their own agreement to accept decision of arbitrator as “final and binding”
Arbitration is usually a last resort, or final stage of grievance process, when other ADR processes like mediation have failed.
The objective of arbitration is adjudication, not compromise.
Informal Process:
Similar to court trial
opening statements made
cases presented through introduction of evidence, including testimony of witnesses
closing statements made
Arbitrator has a set period of time in which to render a decision on the merits of the parties’ claims.
Decision is called an “Award”.
Award should be “just and equitable”.
Award does not have to be “reasoned” and contain findings of fact or conclusions of law.
However, the Award should be supported by evidence gathered during the arbitration hearing.
Parties have a set period of time in which to challenge the award.
Challenging the award is usually done by a motion to the appropriate court to modify or vacate the award.
Grounds for modifying or vacating an arbitration award are narrow.
Most Awards are “final”.
Winning party may apply to the courts to confirm the arbitration award and turn the arbitration award into a court judgment and use court to enforce judgments.
Industries That Use Arbitration:
- Maritime
- Securities
- Commodities
- International Trade
- Labor
- Construction
- Medical Malpractice
- Escrow
Most federal and state courts strongly support the use of arbitration and will routinely enforce arbitration agreements. The Federal Arbitration Act and adoption of similar statutes by most states have made arbitration agreements enforceable in most courts and have fostered a general acceptance by courts of arbitration as an alternative to litigation.
Why Arbitration?
Provides speedy resolution (5-60 days)
Less costly than litigation
Less discovery
Private and Informal
Expertise of specialized tribunal
Final and Binding
Easier to schedule hearing with arbitrator than with court
Courts are not well adapted to needs of labor-management relations
Decision maker will have practical knowledge of the subject matter surrounding the disputes
Author:
Lori LaConta, Esq.,
Arbitrator-Mediator