arbitration process

Are you involved in a legal dispute? Perhaps you or another party has requested an arbitration meeting.

However, you know nothing about the arbitration process. 

The process involves gathering evidence, assembling witnesses, and presenting arguments. From there, a person or panel will issue the proper verdict. 

It resembles a court hearing, but it’s less formal. This type of hearing will resolve disputes faster. 

This article will discuss arbitration hearings in greater detail. Let’s explore.  

What is Arbitration? 

Arbitration is a resolution body that’s independent of the court system. The hearings are private, and the court shouldn’t interfere in the hearings.

A panel usually hears the arguments. The panel will make decisions that all parties must agree to. 

The rulings within this system are binding, and another body cannot overrule the decision. There’s also no option to appeal the ruling

One person can preside over the hearings and make the final decision. Conversely, three people usually reside over the process. Overall, the panel will consist of an odd number of people to foster a tiebreaker if necessary. 

A person can become a panelist if each party mutually agrees to the appointment. In some instances, each side may choose an arbitrator. Then, the two panelists appoint a third person. 

On the other hand, an outside party may choose the panel members, such as a court or an institution. The panelists can be from all walks of life. For instance, the panel members could be lawyers

The panelists are objective parties that will resolve lingering disputes. The goal is to impose a fair verdict. 

Overall, there are three types of arbitration:

  • Consumer Arbitration: Consumer arbitration pertains to disputes between consumers and businesses. 
  • Labor Arbitration: Labor arbitration refers to employment disputes and collective bargaining agreements. There are two types of labor arbitration: interest arbitration and rights arbitration. Interest arbitration involves bargaining disputes, and rights arbitration addresses violations within collective agreements.  
  • Commercial Arbitration: Commercial arbitration settles disputes between two enterprises. Commercial arbitration is the most common type. 

Arbitration is different from mediation, where the rulings are non-binding. In some cases, however, arbitration rulings are also non-binding. 

How the Process Works 

First, one party can petition the American Arbitration Association (AAA) for a hearing. From there, the opposite party receives a notification about the filing.

The receiving party must respond within a certain deadline. You may also find arbitration clauses in contracts and agreements.

The contract will appoint a neutral body, such as the AAA. It may also appoint another institution (i.e. the National Arbitration Forum).  

When both parties agree to the arrangement, the neutral organization may establish procedures and guidelines conducive to both parties. Procedural issues may include such matters as:

  • Gathering evidence
  • Finding Witnesses
  • Obtaining Depositions
  • Deciding the number of arbitrators
  • Imposing timelines and deadlines 
  • Deciding how the arbitrators are chosen
  • Establishing award procedures

The preliminary hearing exists to establish basic rules before proceeding any further. Leaders within the body are free to tailor the hearing as necessary.   

After, both sides will present their arguments and convey additional information. Then, the primary hearing takes place.

Both parties present evidence and hear witnesses. In most cases, the hearing will only last a single session.

After the hearing concludes, both sides will present additional information and documentation if necessary. However, the submission of additional information depends on the panel’s discretion.

Shortly thereafter, the panel will issue a verdict. They will also bestow awards as stipulated from the procedural hearing. 

Pros and Cons

Pros:

This resolution process is usually faster than the court process. Whereas a hearing can last a single session, the court system may involve several sessions. 

In many cases, all parties must wait before a judge or jury hears the case. They must also wait until judges can fit the hearing in their schedules. Further, the preparation time is less demanding.

Plus, arbitration meetings can be less costly. Prolonged court sessions can add up over time. 

  • Note: Arbitration can also be costly, with a single arbitrator costing $2,000 or more. However, the cost depends on how the parties structure the hearing. 

This type of procedure also allows you to appoint experts and professionals who understand the subject matter.

In a court hearing, you may contend with a judge or jury who doesn’t fully comprehend the dispute. This is especially true when dealing with complex business matters. 

Cons: 

Despite the convenience, you may scoff at the informal evidence methodologies. Since no judge or jury examines the evidence, you may end up with a panel who doesn’t know how to organize the evidence. 

Moreover, many critics note the inability to appeal a decision from the panel. You must abide by the rulings of the hearing, no matter how unjust the verdict may be. 

Additionally, arbitration clauses outlined in contracts and agreements usually favor the companies instead of a person. Therefore, the procedure may not be as neutral as you’d think. Worst of all, you may deal with a biased arbitrator who favors the other side.  

Is the Arbitration Process Worth It?

The arbitration process is worth it if you don’t want to proceed through the court system. When considering the advantages and disadvantages of arbitration, the pros tend to outweigh the cons.

Arbitration hearings are objective bodies that can issue a just verdict to both sides. If you prefer formality, however, consider a court hearing instead. More importantly, discuss your case with an attorney who is familiar with this type of hearing. 

Are you dealing with a legal dispute after an injury? Click here to learn how a personal injury lawyer can help you.  

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