Arbitration
Arbitration is the method of dispute resolution that is very close to a private tribunal – private court. Procedures are usually determined by contract language, such as the dispute will be resolved under the rules of the American Arbitration Association (AAA). Quite often contract language will require rules of arbitration of the AAA, but in most cases, the party stipulating the arbitration is not even aware what the rules actually state. Arbitration is suppose to be informal and thus efficient. The arbitrator may at any time interrupt a presentation by either party to ask questions to become educated on a particular issue. The arbitrator is then free to interpret the spirit of the rule and make a decision. Courts are formal; where in arbitration, motion practices, and discovery issues are streamlined or eliminated.
If your case goes to court, the dispute is resolved, but as a result, a new rule is issued. The ruling is based on precedent and each subsequent case to that precedent narrows or expands the decision of the first precedent. A judge chooses his words very carefully when preparing to discuss the reasons he ruled in the manner he did. An arbitrator is not generally bound to precedent and does not have to write a formal opinion.
Arbitration can be either binding or non-binding, depending on terms of the contract language. Usually after an arbitration decision has been made, further negotiations are very difficult because one party has already won, but in a monetary situation, the winning party may settle for a lower sum in exchange for some other benefits such as an immediate payment, but all in all, the decision is basically final.
Also, in arbitration the parties are encouraged to mediate under the rules of the AAA first, prior to arbitration. The one major rule is the mediator is not allowed (unless mutually agreed) to be one of the arbitrators if the mediation is not successful. Mediation is also sometimes used to narrow the dispute by resolving the majority of the peripheral issues. The rules cover (of course) the fees to be paid and who pays the fees; time and place of hearing; stenographic record; postponements required; what happens if one of the parties fails to show; rules of evidence; and the arbitrator may use interim measures of protection to preserve property if the situation warrants. Rules also vary for procedural track. Fast track allows no discovery, except that two business days prior to hearing the arbitrator may examine copies of all evidence they intend to submit at the hearing.
At the hearing, there generally is no stenographic record; however, in large, complex cases a cooperative exchange of documents and exhibits with discovery controlled by the arbitrator are encouraged so production is consistent with the goal of achieving a fair hearing. The parties may agree to the amount of document discovery.
