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Arbitration Overview
Arbitration is one of the two most common
methods of
Alternative Dispute Resolution (ADR),
with Mediation being the other. Like other forms of
alternative dispute resolution, the parties involved
resolve their dispute outside of the federal and
state judicial systems rather than litigating in the
court. Arbitration is the process by which an
experienced legal professional hears a dispute and
makes a ruling concerning the dispute. Arbitration
can be either binding or non-binding. Binding
arbitration is final and generally cannot be
appealed.
Non-binding arbitration is generally
mandated by the courts and can be appealed.
Arbitration has long been used in labor,
construction, and No-Fault disputes, but is now
gaining popularity in other types of disputes.
Arbitration is a time-tested, cost-effective
alternative to litigation. Arbitration is the
submission of a dispute to one or more impartial
persons for a final and binding decision, known as
an “award.” Awards are made in writing and are
generally final and binding on the parties in the
case. Studies comparing arbitration and litigation
reveal that arbitration is fair to individuals and
businesses. Arbitration reduces the time needed to
resolve disputes.
Traditionally, if individuals or businesses could
not resolve a conflict through negotiation or
mediation, it was necessary to file a legal claim.
Filing a legal claim was viewed as a difficult
process because it took time to prepare the claim to
be filed and to secure witnesses and documents. In
addition, significant expenses were incurred for
filing fees, discovery costs, and attorney’s fees.
Today, parties to a dispute can use arbitration to
avoid the expenses and headaches of traditional
litigation. The decision to use arbitration may be
the result of a private agreement between the
parties, a requirement of state or federal law, or
an order by a court.
Disputes are brought before a neutral third party
(the arbitrator) who, after carefully reviewing all
of the relevant information, issues a final decision
in favor of one of the parties. Consumers,
businesses and even courts themselves have
successfully used arbitration programs to resolve
disputes. Generally, there is widespread
satisfaction with the process. Arbitration offers
parties a decisive legal outcome to their dispute
without the expense and inconvenience of court
proceedings and large attorney fees.
Generally, arbitration as a method for dispute
resolution is more casual and faster than going to
court. The majority of certain kinds of cases are
resolved through arbitration (e.g. No-Fault
automobile cases). The parties may present their
claims in arbitration without the assistance of an
attorney; however, many parties find that using a
lawyer gives them an advantage in the arbitration
process.
Arbitration begins when one party makes a request
for an arbitration. The arbitration request does not
generally require any specific legal form, although
supporting documents are generally included. If
there is no prior agreement the requesting party
would need to obtain a signed arbitration agreement
from the necessary parties, in which the parties agrees to submit the dispute to arbitration and
to be bound by the results.
Arbitration
Definitions
Arbitration: A
statutory method of resolving disputes between
parties, by which disputes are referred to an
impartial third person for resolution; a substitute
for jury and judge.
Arbitrator: The
professional who makes a decision based on the
evidence and testimony presented by the parties.
Award: The
arbitrator’s subsequent decision, which is made in
writing and is enforceable in court under state and
federal statues.
Hearing: A
proceeding wherein the evidence is taken for the
purpose of determining the facts of a dispute and
reaching a decision based on the evidence.
Parties: Two or more
persons or entities involved in a dispute.
Arbitration Agreement:
An agreement to arbitrate can be made prior to or
after a dispute develops. All that is necessary is
for the parties to agree to bring their case to
arbitration and to agree to the terms and conditions
of the arbitration.
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