What is Arbitration?
An arbitration is essentially the same as a trial with some exceptions. During an arbitration, the arbiter (essentially, the “judge”) reviews the information and evidence provided, listens to both sides of the argument, and then comes to a decision on the matter. It can be used in either the public or the private sector.
As aforementioned, there are some differences between a traditional court trial and an arbitration. The exceptions for arbitration are:
- The arbitrator (or panel of arbitrators) make(s) the decision, also called an “arbitration award.”
- There is generally no court reporter and the arbitration does not take place in a courtroom.
- Absent some very narrow and strict exceptions, the arbitration award is binding — that is, there is no right to appeal.
- Since the arbitration is not a matter of public record, the parties’ dispute is private.
- Discovery, or the process by which attorneys generally prepare their clients’ cases, is extremely limited.
- The rules of evidence are relaxed somewhat so that the parties have a broader, more expanded opportunity to tell their stories.
- With very few exceptions, it is much less expensive than litigation and trial.
- An arbitration’s time frame is substantially less than that of litigation and trial.
Why Choose Arbitration?
As stated above, there are some differences between court litigation and arbitration. Many people prefer arbitration due to the following reasons:
- Privacy: Arbitrations are not a matter of public record. For those wanting to keep their matters private, this can be a compelling incentive to opt for arbitration.
- Cost: In general, arbitrations tend to be much less costly than taking the traditional steps through the legal system.
- Expertise: Those who opt for arbitration tend to seek out those arbitrators that have expertise in the area being discussed. For example, a judge may not have extensive knowledge of marine boating law but a lawyer who specializes in marine boating law would.
- Time: For the most part, arbitrations are much less time-consuming as compared to going through a traditional trial. If time is of the essence, an arbitration might be the better option.
What are the Different Types of Arbitration?
There are different types of arbitration that are available, namely those outlined in arbitration clauses that are in contracts that people, companies, and parties might have signed.
- Mandatory Arbitration: Mandatory arbitration, as the name suggests, means that certain disputes that are included in an arbitration clause must go to arbitration. Many companies have mandatory arbitration clauses in their contracts due to the fact that arbitrations are not a matter of public record.
- Voluntary Arbitration: Voluntary arbitrations are those that are not mandatory but rather two parties opting to settle for arbitration for whichever reason.
- Binding Arbitration: In a binding arbitration, the arbiter’s final decision is final and not able to be appealed. It cannot be overruled by a court save for a very limited set of circumstances.
- Nonbinding Arbitration: Nonbinding arbitration outcomes, on the other hand, can be rejected and may result in one or both parties opting for a trial instead.