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What is Arbitration?

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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?

There are three ways that tribunal members or arbitrators are appointed. The disputing parties can appoint arbitrators by mutual agreement. Typically, each party will appoint one arbitrator. They may also be appointed by existing tribunal members. It is typical for both parties to appoint an arbitrator and then the two arbitrators will appoint a third. An arbitrator may also be appointed by an external party. The court can appoint an arbitrator in some cases; or the parties involved can nominate an institution or an individual to provide arbitration.

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 selected they will make the procedural decisions. They will make any decisions on issues on which the parties in dispute cannot agree. The arbitrator will inform the parties what documents are to be presented as well as when and where the hearing will be held. If one of the parties involved asks to delay the arbitration so that they can prepare, the arbitrator will decide whether or not the delay is fair to both parties involved. When arbitration is mandated by the courts, the case usually has to be completed within 7 weeks of when the arbitrator is chosen. The arbitrator has 20 days to render a decision once the hearing has been completed. If the arbitration is voluntary, then the parties can set their own time frame for resolution. Before the hearing occurs, each of the parties must provide the arbitrator with a list of evidence that will be presented along with a list of witnesses who will testify. Each of the parties involved will have to provide contact information for their witnesses as well as copies of all the documents that will be used as evidence in the hearing. The courts do not provide a court reporter. If one of the parties wants to record the arbitration they have to provide for it.

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