Though it may seem complicated, the arbitration process is actually much less complex and much more inexpensive than the common litigation process, which is typically held in a courtroom setting. Both parties agree on a neutral third party and a set of rules to determine a resolution to the outstanding matter being disputed. The neutral third party, also known as the arbitrator, will then issue a legally enforceable ruling regarding the dispute, which must be abided by both parties.
The arbitrator is a person, or sometimes, a set of three people, that determine a solution to a conflict. He or she does not have to be a legal professional, and often he or she is a specialist in the area that the argument concerns. The arbitrator must be completely neutral to the case, and approved by both parties. Also, he or she is not responsible for any second hearings or appeals, because decisions made at an arbitration meeting are final. The arbitrator may not dole out punishments or assign punitive awards, but he or she can recommend that the opposing parties set a court date to make any monetary rewards, or to request more severe legal action.
Before the hearing takes place, both parties have to attend a conference and agree to a set of rules that will be upheld throughout the entire arbitration process. These rules may include, but are not limited to:
The arbitration hearing process is much like a courtroom scene. However, it is much more private and informal. Each party is given an equal time to present his or her case. He or she may present witnesses (previously approved in the pre-hearing conference), and these witnesses can be questioned by the arbitrator. Then, the arbitrator or arbitrators takes a short recess to determine a verdict. His or her verdict is final (though punishment can be doled out in formal courtroom litigation). The arbitrator makes an “award” or gives a decision to the two involved parties.