You’ve probably heard that arbitration is a good option for businesses dealing with disputes, but you may not know much about it. It is a process much like courtroom litigation, except that it is somewhat less formal in terms of both procedure and rules of evidence.
Generally, arbitration is a hearing before one or more neutral third parties known as arbitrators. In general, it is less costly, quicker and more certain than litigation. It can be expedited in a way that courtroom litigation cannot be. It is private and confidential and does not lead to a public record.
Your contract or agreement may require the arbitration of any disputes that arise. Or, you may come to an agreement to arbitrate once a dispute arises.
One of the most conspicuous aspects of arbitration is that it is generally final. That is to say, there is no appeal of an arbitrator’s award in most cases. This can be helpful for companies that cannot afford to rely on the appeals process because it is too costly, too time-consuming, or too uncertain.
Another aspect of arbitration is that you can customize it. For example, you and the other party can stipulate that any proprietary information revealed during the arbitration will remain confidential. You can agree on the rules of evidence to be used, the location, and the identity of the arbitrator or arbitrators.
General outline of an arbitration
The first step is agreeing to arbitrate. Again, this may be a requirement of your contract or may be decided on a dispute-by-dispute basis. After you have agreed to arbitrate, you will need to select an arbitrator or arbitrators.
Expedited decisions: The parties can expedite the arbitration in cases where the no claim and or counterclaim exceeds $75,000. This can result in an arbitration award in as soon as 14 days from the end of the hearing.
Next, there may be a preliminary hearing in which the arbitrator(s) get to know the issues to be resolved and which facts have been stipulated. The preliminary hearing may also result in orders about how and when the evidence will be handed over to the other side, to identify witnesses and to schedule other hearings.
The hearing itself is much like a court trial but with less formal rules. Each gives an opening statement, presents its case, and challenges the other party’s case.
After the hearing, the arbitrator(s) will render a decision and an award. This decision can be brought to court and made into an order. If you have undertaken binding arbitration, this decision cannot be appealed.
For more information about arbitrating disputes, contact your business law attorney.