Arbitration is one form of what is commonly known as Alternative Dispute Resolution (ADR). It's a process where both sides come together and agree to follow and respect the decision of the arbitrator.
This is one route you can try instead of filing a lawsuit and going to court to resolve a dispute. The arbitrator is usually an attorney familiar with the field of law being decided. The decision of the arbitrator is legally binding against both parties, although the decisions may be appealed, in some cases.
When is Arbitration Used?
As mentioned above, arbitration can be used when two parties to a dispute agree to it. However, it is most commonly used in cases where the parties entered into a contract prior to the dispute. Various types of contracts, including employment contracts and agreements upon purchase, often contain language providing that arbitration will be used to first try to resolve any disputes between the parties to the contract.
In cases where consumers agree to terms when purchasing items or services, they may be surprised to find that they have agree to arbitration (having not read the agreement word-for-word).
Why Enter into Arbitration?
There are several reasons why choosing to work with arbitration lawyers is a better course of action than filing a lawsuit. These include:
- Arbitration is less expensive in comparison to litigation. Litigation can be a long, drawn out process that can take years to decide. In comparison, arbitration is much faster and more efficient.
- Hiring arbitration lawyers saves money for litigation and legal fees.
- Arbitration prevents an opposing party from suing while in arbitration. Most courts will not allow a lawsuit to continue when both parties are in arbitration.
Is there a General Process for Arbitration?
Typically, if arbitration is provided for in a contract, the terms for arbitration will be outlined in the contract. In general, though:
- One party serves the other notice of arbitration;
- The second party responds;
- An arbitrator or panel of arbitrators is chosen; and
- A hearing is held.
- This may be similar to a trial, with witnesses and evidence presented, but it is less formal and does not necessarily follow the rules of court.
How Do I Know Whether Arbitration is Right for My Case?
There are various considerations a person must consider when deciding between arbitration and court. These include:
- Ask a Lawyer: An experienced arbitration lawyer can advise you on the strength and characteristics of your case. Then you will be able to make an informed decision on whether arbitration is a better forum for your case.
- Decide How Long You Want this Issue to Continue: In most cases, parties want their disputes resolved quickly and efficiently. A party should consider their needs and make a decision.
- Financial Considerations: think over whether you are more likely to win a larger amount if you go to trial vs. settlement, and weigh it against the cost of a legal fees and a trial.
- Specialized Disputes: Some parties may desire a decision maker who is an expert in a field other than law. Unlike judges, arbitrators can come from non-legal backgrounds, including: medicine, engineering, and religion.
Can I Appeal an Arbitration Award?
Arbitrations are generally meant to be binding, and to be a final resolution of a conflict. By their very nature, arbitrations are used as a way to resolve conflicts without the necessity of taking the matter to court to be litigated. The point is to save the time and expense of court.
United States courts do not look favorably upon the appeal of arbitration awards, and appeals of awards are rarely successful. Court will not review arbitrations that are still in process. However, there are some narrow circumstances in which the awards may be appealed (after the arbitration has concluded):
- If the arbitrator or arbitration panel did not have jurisdiction to render the decision. This might occur, for instance, because the arbitrators were not chosen correctly according to the terms of the contract which allowed for the arbitration.
- If there was a serious legal irregularity on the part of the arbitrator or arbitration panel. For example, if the arbitration clause in the contract providing for arbitration was invalid, it might invalidate the entire arbitration. If the proceedings are fraudulent in some way, this might also be grounds for appeal. Misconduct of the arbitrator(s) may also present ground for appeal.
It should also be noted that in order to appeal, there must be a record of the arbitration. This is because the courts must have evidence of the arbitration proceedings in order to make any ruling upon their correctness.
Should I Consult an Attorney?
The decision whether to enter into arbitration or litigation is an important one. There are many factors to consider and an attorney can advise you on your decision. A business attorney can consider your case and help you determine whether arbitration is right for you. Furthermore, an attorney can help you decide what arbitrator would be the best fit in your situation.