Basics of Arbitration

What is arbitration? Arbitration is a legal mechanism used to resolve disputes through the aid of a neutral third-party who is given the authority to make a legally binding decision. The weight of this decision is what distinguishes arbitration from mediation. The parties are not obligated to follow a mediator's decision. In arbitration, both parties must agree to be bound by the arbitrator's decision before entering into the process. The arbitration process consists of written submissions from each party and an evidentiary hearing to establish the facts of the case.

Arbitration hearings are private proceedings conducted according to the U.S. Arbitration and Mediation rules. Because they are not handled by the court system, the information disclosed and final decision do not become part of the public record. Likewise, members of the public are not permitted to attend arbitration hearings as they would a normal court proceeding. Another benefit of arbitration over a regular lawsuit is that the parties are able to set the parameters of the hearing to suit their individual needs. Some factors that can be adjusted include limiting the number of witnesses that may be called, restricting the arbitrator's award to only cover certain issues, and deciding upon the amount and type of evidence to be provided by each party.

The mechanics of an arbitration hearing are similar to a normal trial court proceeding, with both parties being given a chance to make their case. Each party is allowed to make an opening statement and present their evidence, then question their witnesses, and make a closing statement. The opposing party is also given an opportunity to cross-examine the witnesses. Because this is a private proceeding, the formal rules of evidence do not apply and a broader range of information becomes admissible. Some arbitration cases are decided only on the basis of written statements and no evidence or witnesses are present, but this depends on the parameters set by the parties before entering the arbitration process.

The process of choosing a neutral third-party arbitrator is set out by the U.S. Arbitration and Mediation rules. The arbitrator must be acceptable to both parties before the process is begun. This gives arbitration another advantage over a standard trial because the parties are able to choose a third-party who is an expert in the subject of the dispute instead of having to accept the decision of a judge who may not have any technical knowledge of the industry.

Often times, an Attorney provides arbitration services. Consult with one near you to find out if it's your best choice.