In California, binding arbitration is a dispute resolution process that is handled outside of a courtroom. In this process, the parties involved present their case to an arbitrator who makes a legally binding decision that can, in general, not be appealed.
Binding arbitration can be cheaper, faster, and more private than a public trial. However, the parties do give up their right to a public jury trial. There may also be limited ways to challenge the decision the arbitrator made.
Arbitration is a type of alternative dispute resolution (ADR). It is less formal than a courtroom trial and is a confidential process. In many situations, an arbitration clause will name the arbitrator or arbitration company that must be used for the process.
To find out more information about arbitration in California, it is important to have a lawyer consultation.
What Is a Binding Arbitration Agreement in California?
A binding arbitration agreement in California is an agreement that is signed by parties to a contract that requires that they settle any disputes outside of a courtroom using arbitration. As previously noted, arbitration is a process where parties present their dispute to an arbitrator who issues a binding decision.
A California lawyer can help a party to a binding arbitration agreement understand their rights and obligations related to the arbitration process.
What Is an Arbitration Clause?
An arbitration clause is a clause that is included in a contract that governs how disagreements have to be settled. A mandatory arbitration clause states that the parties will not litigate their dispute related to the contract, for example, a breach of contract, but will, instead, arbitrate the issue.
When the term mandatory is included, it means arbitration is required. This is because, by signing the contract, they forfeit their right to litigate in court.
A mandatory arbitration clause will often read, “[a]ll disputes or conflicts that arise out of this contract will be settled according to arbitration rules.”
What Types of Resolutions Can Be Made During Binding Arbitration in California?
There are different types of resolutions that can be made during a binding arbitration in California. These include a monetary award, specific performance of a contract, a court-enforceable order, and other remedies similar to those given in traditional legal cases.
An arbitrator is authorized to issue a binding and final decision after hearing arguments and evidence from both sides. The remedies that will be available will depend on the nature of the dispute.
Monetary Award
An arbitrator can award monetary damages to compensate a party for their losses due to negligence, breach of contract, or other wrongful acts. If a dispute involves employment, an employer may have to pay bonuses, commission, back wages, or other wrongfully withheld compensation.
In addition, disputes involving consumer issues, business issues, or employment issues may be resolved with a monetary award.
Contractual Resolution
The arbitrator can also order a resolution that involves performance under the contract. The arbitrator may order that one party fulfill their obligations under the contract. This may occur when the subject matter of a contract is unique, such as real estate.
The arbitrator may also make a decision about how the terms of a contract should be interpreted. Disputes involving breaches of commercial or employment contracts.
An arbitrator can decide if services or goods were delivered as promised in the contract as well as whether or not they meet the expected warranties or standards. If there is a dispute about the breakup of a business partnership, arbitration may be used.
Employee Issues
An arbitrator can make decisions about harassment and discrimination in the workplace, whether a wrongful termination occurred, and wage and hour disputes. An arbitrator can award damages in these types of cases.
What Is an Arbitration Award?
An arbitration award is a monetary award that one party is ordered to pay to the other. After an arbitration hearing concludes, the arbitrator considers the evidence and arguments presented by each side.
Once the arbitrator considers all of these issues, they will issue a decision that is called an arbitration award. This award outlines what each of the parties are entitled to.
Arbitrators often find in favor of one of the parties, and the award is only given to one. In some cases, however, the arbitrator may determine that the claims on both sides have merit.
Awards are commonly monetary or financial. However, some may be non-financial, such as restoring a worker to their previous position or stopping a specific business practice.
An arbitration award is not the same as an award from a jury in court. Jury awards come from civil courtroom trials, while arbitration awards are granted by arbitrators outside of a courtroom.
How Do I Choose an Arbitrator?
There are several different ways a party can choose an arbitrator that may be used depending on the circumstances of the dispute. Some arbitration clauses provide an arbitration institution that will be used, which includes a number of arbitrators that can be used. These companies may have their own rules for selecting an arbitrator, which may involve the parties choosing one or the company appointing one on their behalf.
There are also online directories that list arbitrators along with their qualifications. These can be helpful for finding an arbitrator who has experience with the specific type of dispute or in the specific injury.
An individual can also ask for recommendations from professionals with experience in the industry or with a similar type of dispute. This can help locate an arbitrator who has a positive reputation for fairness.
The method that parties use to find an arbitrator will vary based on their specific issue and the resources available to them. When choosing an arbitrator, it can be helpful to ensure the arbitrator is impartial and qualified to handle the dispute.
Key characteristics someone can look for in an arbitrator include:
- Experience: It can be helpful to find an arbitrator with experience in the specific industry or area of law related to the dispute.
- This can help make sure that the arbitrator will understand the issue and be able to make informed decisions.
- Training and qualifications: An arbitrator may be accredited or certified by a professional organization and may have additional training and qualifications that are helpful in handling the dispute.
- It can also be helpful to consider the arbitrator’s training, education, and professional qualifications.
- Impartiality and reputation: Find an arbitrator who has a reputation of being impartial, unbiased, and fair.
- It is important to make sure the arbitrator does not have a bias or any conflicts of interest that would affect their decision making.
- Cost: It can be helpful to find an arbitrator whose cost is within the budget.
- Availability: The arbitrator’s workload and availability may be important to consider, as one who is too busy may not provide appropriate attention, while one who is very available may not have much experience or be in high demand.
Can I Get Out of a Binding Arbitration in California?
It may be possible to get out of a binding arbitration agreement in California by opting out in a certain timeframe, if allowed under the contract. It may also be possible to challenge the enforceability of the agreement in court based on unconscionability.
If the arbitration has already been completed, it may be possible to pursue a court order to vacate the arbitration award for a valid legal reason.
Opting Out of an Arbitration Agreement
An individual should check their contract to see if it offers the ability to opt out of the arbitration agreement within a specific time frame after signing, often 30 to 60 days. Typically, this must be done in writing and sent to the company.
Although this may be an option, there are some employers who may view this as a negative. This means it may have an affect on their potential future employment opportunities.
Challenging an Arbitration Agreement
It may be possible to argue against the arbitration agreement itself. A court may determine that the agreement is unenforceable due to unconscionability because the terms are one-sided or the party was not given an informed choice when they signed it.
If a party can show that the contract was drafted using complicated legal terms and language that gave the either party unequal bargaining power, or a significant advantage, it is likely to be deemed unconscionable and unenforceable.
Challenging an Arbitration Decision
One party may request that a court vacate, or cancel, the arbitration award through a process known as vacatur. The grounds for this action are often very limited, but may include when there was corruption or fraud, or if the arbitrator exceeded their powers. This is a challenging process that usually requires professional legal help.
Do I Need a Lawyer for Help With Binding Arbitration in California?
If you have any questions, concerns, or issues related to binding arbitration in California, it is very important to reach out to a California employment lawyer. Your attorney can review the details surrounding your issue and claim and give you advice on preparing for the arbitration process.
You can use LegalMatch to quickly and easily find a California employer lawyer in your area who can address your concerns and issues. Simply fill out the online submission form, which only takes around 15 minutes, and you will receive responses from member lawyers in as little as one day.
