What is arbitration?
Arbitration is a contractual dispute resolution procedure. The parties either have agreed to the arbitration process as part of an existing contract before a conflict arises, or they may agree to arbitration as an alternative to the litigation process. The arbitration hearing can be more informal than a court proceeding but often includes opening statements, witnesses providing testimony under oath, documentary evidence and closing arguments. The arbitrator makes a binding decision based on the evidence and the law and provides the parties with an enforceable arbitration award that can be filed in court as a judgment.
How is the arbitrator chosen?
The parties choose the arbitrator using pre-established rules set out in the agreement to arbitrate. The arbitrator is not officially appointed until the parties are satisfied that the arbitrator has no conflicts of interest and is truly a neutral and knowledgeable decision maker.
Why choose arbitration?
Control over the decision maker and the rules. Some people prefer arbitration to a court proceeding because the parties have control over selecting the decision maker and over the rules which govern the process. The arbitrator maintains neutrality by adhering to strict rules which prohibit separate ex parte communications with any party or lawyer.
Cost. The costs of arbitration are more predictable than the costs of litigation and are typically less because there is limited discovery. The focus of arbitration is reaching a fair decision, without stressing the procedural aspects of preserving a record for trial.
Certainty. The arbitrator’s decision is binding and except under extremely limited circumstances arbitration decisions cannot be appealed. The parties have determined in advance the procedures which will be employed if a dispute arises, and those rules usually involve less pre-trial discovery, a shorter time frame for completing the pre-hearing tasks, and flexibility in setting hearings and other deadlines.
Confidentiality. There is no mandate that arbitrations are confidential. But once a case is in arbitration, the documents are not “filed” publically, and public access to the records is limited. Likewise, the arbitration hearing is not necessarily confidential, but the arbitrator usually limits attendance to the parties, the lawyers and the witnesses.