Arbitration: An Alternative To Courtroom Drama
Arbitration is a process that offers an alternative path to traditional litigation. It’s a form of alternative dispute resolution (ADR) that allows parties to resolve conflicts outside the courtroom with the help of a neutral third party (or parties), known as an arbitrator(s). Often, a retired judge or attorney, or a panel of them, will act as a judge in your case. This approach has positives and drawbacks compared to having a judge or jury in a courtroom deciding the matter. Our friends at Focus Law LA discuss this in more detail below.
When Can You Arbitrate?
Arbitration is a flexible tool that can be employed when both parties agree to it. This agreement can be established before or after a dispute arises. This contrasts with court proceedings where the plaintiff files a complaint, and the defendant must respond or risk a default.
Arbitration requires mutual consent, whether embedded in a form contract or agreed upon in response to a specific dispute. Arbitration agreements are widespread:
- Consumers encounter arbitration clauses while signing up for credit cards, buying cars, making travel arrangements, or signing up for gym memberships
- Employment contracts often include mandatory arbitration clauses
- Commercial contracts frequently rely on arbitration to resolve disputes
Thanks to the Federal Arbitration Act, courts give agreements significant weight, ensuring that arbitration is widely used as a method for dispute resolution.
How Arbitration Works
The arbitration process is generally more streamlined than a courtroom trial, with simplified rules and a faster resolution. Appealing a decision to the legal system is nearly impossible. Parties engaging in arbitration should seek representation from attorneys experienced in ADR to navigate its procedures and rules.
The arbitration process begins when the complaining party issues a notice of intent to arbitrate. It outlines the dispute’s nature and sets the stage for what follows. Both parties select an arbitrator or a panel of arbitrators, often following guidelines established in their contract.
During arbitration, the process resembles a trial in many ways. Parties present evidence, call witnesses, and argue their cases. The procedures are often less formal, and state or federal rules of evidence may not apply. This can speed up the process significantly but not allow a party to get full access to evidence held by the opposing party. After the hearing, the arbitrator or panel issues a ruling, which may be binding or non-binding, depending on the parties’ agreement.
Arbitration Vs. Litigation
Arbitration is normally a more streamlined and cost-effective alternative to going to court. This is particularly true for commercial disputes where arbitration can save time and resources.
For smaller disputes, the cost of arbitration may not be worth it if small claims court would be a quicker and less complex resolution. The ability to choose an arbitrator with specific industry expertise can be beneficial. Judges are usually selected for cases at random, so the parties may or may not have a judge knowledgeable about an issue or industry.
Arbitration proceedings are typically private, unlike courtroom trials which are open to the public. This privacy appeals to parties seeking confidentiality and who want to avoid publicity.
Arbitration can be an effective and more efficient alternative to traditional litigation, offering speed, flexibility, less time, and lower costs when resolving disputes. If you want to explore arbitration as a way to resolve a dispute or you’ve received notice that you may be forced to engage in one, contact a business litigation attorney and discuss your options.