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Arbitration refers to one of several methods, collectively referred to as "alternative dispute resolution" (ADR), for resolving legal disputes other than through a formal court system. Arbitration is very similar to a trial in court, except that the claims and defenses are presented to a privately-retained neutral party ("arbitrator" or "arbiter") rather than a judge or jury.
When people in a dispute cannot resolve the dispute themselves, either through face-to-face negotiation or with the assistance of a mediator, they can agree to refer the matter to arbitration. In arbitration, a neutral person or panel of people hears the facts and issues and makes a decision. Arbitrators are often people who are experts in a specific area of the law or a particular industry, especially in cases where the decision-maker needs to be knowledgeable about a particular subject matter or business practice.
Arbitration tends to be less formal and quicker than going to court. The parties can agree in advance on the ground rules for the arbitration (as opposed to court procedures which are fixed). One or both parties may have a representative speak for them at the arbitration hearing or they may speak for themselves.
The arbitrator then makes a decision based on the facts, any contract between the people, and the applicable laws. The arbitrator will explain how the decision was reached.
The arbitrator may also make a decision on costs. Depending on how complex the case is and how long it takes to resolve, arbitration usually costs less than going to trial.
Since it is intended to substitute for a trial, formal arbitration is generally as binding as a court adjudication.
Therefore, like it or not, a decision of an arbitrator may be appealed only under very narrow circumstances and criteria. (In fact, the arbitration agreement may designate that the decision is final and binding and cannot be appealed.) However, some forms of arbitration may be expressly designated as "non-binding". In those circumstances, one may accept or reject the arbitration decision and continue with litigation in the courts.
Arbitration has become a preferred alternative favored by both courts and parties for resolving disputes. The use of arbitration has greatly expanded in recent years, because of the fast resolution of disputes. The arbitration process also affords the parties a degree of privacy for sensitive or personal matters.
The arbitration process generally begins with the filing of a request for arbitration. This action may be performed by direct application to the forum designated in the private arbitration agreement or by court order. Parties who simply wish to arbitrate a matter should contact an entity that offers arbitration services, such as CEDIRES.
CEDIRES will furnish the parties with a copy of the Procedural Rules (also available on this website). Attorneys may represent the parties.
Generally, an arbitration hearing parallels a court trial, in that there can be the taking of testimony from witnesses and the introduction of evidence.
However, many arbitrations are conducted on the basis of "summary briefs" from each party, which outline the issues and the arguments in document form. Arbitration decisions are always in written form. A decision may or may not be appealable, depending on the forum and the agreement of the parties.
Source: adapted by CEDIRES from Encyclopedia of Everyday Law, ©2003 Gale Cengage. All Rights Reserved.