With recent budget cuts to the judiciary, court dockets are overburdened and clogged. Disputes that could be resolved in four to six months are taking a year or more. Arbitration can avoid such delays, is generally less formal than courtroom hearings or trials, and can be completed in much less time. Disputes are referred to arbitrators who review the evidence, listen to the parties, and then make decisions.
A majority of arbitrations arise out of contractual provisions. Arbitration clauses can be simple, stating that claims will be settled according to arbitration rules. Arbitration clauses can also be complex, controlling large numbers of matters, i.e., how arbitrators are selected, where arbitrations will be held, who pays attorneys’ fees, and whether final arbitration awards must be kept confidential.
Arbitration agreements can require that disputes be arbitrated through a large arbitration association or simply that the parties agree on an independent arbitrator. If the agreement requires a large arbitration association, the association helps select the arbitrator, or panel of up to three people for complex cases, who will hear and decide the dispute.
The associations usually impose their own procedural rules and oversee housekeeping details such as notifying the parties when and where to meet. If no association has been specified in a contract, the parties must choose an independent arbitrator, administer the proceedings, and set schedules and rules that will control. Such arrangements are often quicker and less expensive than when an agency is involved.
Once an arbitrator has been selected, brief conferences may be held to discuss issues to be resolved and determine how the arbitration will be conducted, including confidentiality and the need for the discovery of evidence. At the final hearing, each side may present their version of the conflict, including witnesses, documents and other evidence. The parties generally have an opportunity to give closing statements summarizing the evidence and confirm why the arbitrator should rule in their favor.
Arbitrators can base decisions on what they determine is fair. Unlike a judge, an arbitrator is not required to follow the law or reasoning of earlier case decisions. Arbitration decisions are usually regarded as final and it is very difficult for an appellate court to review or vacate them. One must generally establish that corruption, fraud, or undue influence was employed in securing the award or that the arbitrator exceeded his/her power.
