Arbitration
-An out of court resolution of a disagreement between 2 parties decided by an impartial third-party arbitrator
-No judge, no jury, no courtroom
-Binding
-Arbitration is more like trial than mediation because it is a binding decision by an outside neutral party, the arbitrator
-Arbitrator isn’t a judge but acts like one in that decision is binding
Why would someone choose arbitration
-Tends to be cheaper & faster than full trial
-Private, confidential often (big reason people choose this)
-Way to come to binding agreement
Arbitration provisions
Arbitration provisions may be agreed to by contract, generally stating that if there is a conflict, the parties will use arbitration & not court to resolve their dispute
Speed re arbitration
-An average arbitration takes about 7 months vs 2-3 years on average for a court case to resolve
-The arbitration can begin when the parties mutually agree & when the arbitrator is available
Costs re arbitration
-Arbitration is almost always going to be cheaper than going to trial
-Typically no rules of evidence that apply to arbitration (lower cost)
Rules of evidence re arbitration
-Those rules are incredibly complicated but certain arbitrators may decide to use certain rules but it depends on circumstance
-Most arbitrators allow almost any evidence into the arbitration process
-Relaxed discovery means lower costs
Rules re arbitration
-Parties & arbitrators will set rules for what will apply or contracts will specify what rules need to apply
-If contract is silent on rules, most arbitrators will use rules of evidence
Arbitration vs trial
Depending on parties, issue, costs - the parties may choose to have a more formal arbitration process (looks very similar to trial - very expensive, very formal, rules of evidence, cost isn’t much cheaper than trial)
Convenience re arbitration
-The process is simpler & less formal than a trial process
-Hearing is private, local, more comfortable environment than courtroom (less intimidating)
T-he parties may be involved in the resolution
-Arbitrator can be anyone
-Tends to foster a less hostile atmosphere. This can be good for parties that must continue to do conduct business together
Privacy re arbitration
-One of the biggest reasons parties may prefer arbitration
-Unlike going to trial (public in general), it’s completely private
-But sometimes, depends on jurisdictions, the findings (award, damages) may be public but contents are still private
-This is helpful as it relates to sensitive, embarrassing, and/or confidential info like trade secrets or proprietary info
-Confidentiality is determined by the jurisdictions and/or the provisions provided for in the contract at issue
Binding decision re arbitration
-Usually enforceable by any US court
-Appealable when showing of bias or fraud: Meaning, it’s very hard to overturn an arbitrator’s decision (very high standard)
-Attractive in don’t have to go through appeal process (so also cheaper)
