Arbitration is a way to solve a dispute legally. An independent third party will determine the resolution to the dispute in a private setting. An arbitration hearing can use either a tribunal or an individual arbitrator. A tribunal is typically made up of several arbitrators. It is customary in most settings to have an odd number of tribunal members in order to avoid a tie. The parties who are involved in the dispute will hand their power to decide the dispute over to the arbitrator. Arbitration is just as binding and final as litigation and it is a valid alternative to going to court. It has been given the nickname the “business man’s method of resolving disputes.” However, the procedure is governed by both state and federal laws. Many states contain the provisions for Arbitration in their civil practice rules. This helps to provide a guideline for the procedures of Arbitration as well as how the arbitrator’s decision is to be handled. There are several states that have adopted the Uniform Arbitration Act while some states have laid out some very specific guidelines which govern arbitration.
Basic Principles of Arbitration
The point of obtaining arbitration is to have an impartial independent third party obtain a resolution to a dispute. The procedure is meant to be done in a timely manner without extra expense. The parties involved in the dispute will have to agree to how the dispute is resolved. There should not be any interference from the courts.
How are Arbitrators Obtained?
Tribunal members or arbitrators can be appointed in three different ways. Firstly, the disputing parties can mutually agree on the appointment of arbitrators. It is customary for each party to select one arbitrator, and then these two arbitrators jointly appoint a third arbitrator to form the tribunal. Secondly, existing tribunal members may have the authority to appoint additional arbitrators. Lastly, an arbitrator can be appointed by an external party. In certain cases, the court has the power to appoint an arbitrator, or the involved parties can nominate an institution or an individual to facilitate the arbitration process.
What Types of Cases go to Arbitration?
Under most state’s laws there are two types of cases that typically go into arbitration. Sometimes family legal matters will be handled through an arbitrator; and some civil actions which involve claims for damages go to arbitration. In civil cases, a person or business is being sued by a person or business for monetary compensation for damages which have occurred. These may include an injury received from an accident or a disagreement about contracts. For civil cases that involve less than $50,000 unless it is a small claims case, it must go to arbitration. Some courts allow cases to choose mediation rather than arbitration in some instances. Some states require arbitration in matters concerning domestic relations or family law cases where the parties cannot reach an agreement about property or debts. There are also some types of cases which allow parties to choose arbitration instead of pursuing a court case.
How Does Arbitration Work?
Once an arbitrator is chosen, they assume the responsibility of making procedural decisions. They resolve any disagreements between the disputing parties. The arbitrator informs the parties about the required documents and the hearing’s schedule and location. If a party requests a postponement to adequately prepare, the arbitrator assesses the fairness of the delay. Court-mandated arbitration usually requires completion within 7 weeks of selecting the arbitrator. After the hearing, the arbitrator has 20 days to deliver a decision. In voluntary arbitration, the parties can set their own resolution timeline. Prior to the hearing, each party must provide the arbitrator with evidence and witness lists, including contact information. The courts do not provide a court reporter, so parties desiring a recording must make their own arrangements.
