Deal Pack Blog

What is arbitration?

posted on: November-14-2014
by: Tammy Holgerson
category: Tips

Arbitration is referred to as an alternative dispute resolution. As suggested by the name, the idea is to provide an alternative to filing a lawsuit and going to court which is the traditional method for resolving legal disputes. Arbitration is primarily designed to provide for a streamlined and cost-conscious option to deal with a legal issue.

 

Anyone can agree to arbitrate a disagreement or legal issue, but the key word is “agree”. Simply because one of the parties in a dispute desires to enter into arbitration does not take away another party’s right to go to court. Arbitration only comes about when two parties agree to it, either before or after a legal dispute comes up. For this reason, agreements to arbitrate disputes are typically found somewhere in a written contract agreed to by both parties.

 

Arbitrations can take many forms, but in general the complaining party will send the opposing party a notice of their intent to arbitrate a dispute and outlining the basis for the dispute. There is typically a period for response, followed by the selection of arbitrators, and then the hearing itself.  Arbitrations can be presided over by a panel of arbitrators or a single arbitrator. Regardless, the selection process is typically outlined in the contract and input from both parties is requested.

 

In general, the arbitration process involves many of the same components as a courtroom trial. For example, evidence is presented, arguments are made, and witnesses are called and questioned by the parties. Many of these facets are simplified or limited to make the process quicker than the typical courtroom trial.  Following the required hearings, an arbitrator or a panel of arbitrators will usually deliver a ruling to the parties within a specific period of time. Depending on the type of arbitration, this ruling may be final, or there may be options to appeal.

 

The rules of arbitration can vary widely.  Often a contract will specify the rules and timelines that will be applied in a dispute. Parties should refer to their contract or the rules specified therein for the exact rules that govern their dispute.

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