Disputes with vendors, employees or customers are inevitable for most businesses. However, litigation for resolving such disputes can be both time-consuming and costly, resulting in time spent in court rather than in the office.
As a result, most businesses seek alternative solutions such as arbitration and mediation. Besides consuming less time and being less expensive, placing a dispute in arbitration is a great way to determine fair terms that are acceptable to both parties.
What is the definition of arbitration?
Arbitration is a process in which different sides present their arguments to an arbitrator (neutral third party). The American Arbitration Association recommends that both interested parties agree upon their choice of arbitrator in advance. Moreover, both parties must agree to abide by the decisions made by the arbitrator.
How does arbitration work?
After reviewing the arguments from both parties and examining any relevant documentation, the arbitrator renders a decision. For the most part the decision is considered binding and there is no appeal process. However, in special cases an arbitrator will offer a non-binding arbitration course of action of which the parties involved are not bound to abide.
How much does arbitration cost?
While often more affordable than a long-drawn-out court battle, the arbitration process can be quite expensive. In order for the arbitration process to commence, you must pay the American Arbitration Association fees, which can prove to be quite costly, especially for small businesses. In most cases you will also need to pay for the arbitrators time as well.
Arbitration is not a public process
Unlike the disputes in civil and supreme courts, which are matters of public record, the general public cannot gain access to arbitrated disputes. However, court papers can be accessed by people who have basic knowledge of court databases and the court system. Therefore, anyone can appear at a trial or hearing in small business dispute. This might work for or against you depending on your viewpoint on publicity.
How much discretion does an arbitrator have?
While arbitrators have to follow the requirements of preceding case law, the interpretation of these laws is at their discretion. They have the power to determine how they will lead dispute proceedings and what evidence to allow. While arbitrators are generally inclined to let equity and fairness prevail, it is up solely to their discretion, and arbitration cases can be rather unpredictable.
Can you appeal an arbitration award?
Arbitration decisions are usually final and there is a very limited chance of appealing such decisions or awards.
Is arbitration right for me?
Arbitration is not the right answer for all businesses and an attorney should be consulted before binding your business to an arbitration agreement. Considerations must be made for some fundamental and procedural differences between arbitration and the traditional court system, as well as the limited ability to appeal.