Introduction to Arbitration

an assisted form of negotiation

litigation

it is designed to be a streamlined, quicker path to resolving disputes

- arbitration has continued to evolve to more closely resembling litigation, with the same drawbacks, that it was originally expected to avoid
- initially, arbitration was characterized by an informality not present in litigation

A form of adjudication in which the decision to adjudicate is made by contract between the disputants

The "neutral" who hears the submissions of each disputant for the purpose of resolving an active conflict

The binding decision issued by an arbitrator

agreements to submit future disputes, not currently in existence, to arbitration

- Informal: characterized by minimal participation by lawyers, minimal discovery, procedural rules, or rules of evidence. Arbitrator may act in a facilitative manner.

- Formal: marked by intensive participation by lawyers and by the same sorts of formalized and rigid procedural and evidentiary rules as are characteristic of litigation. In its extreme form, almost identical to litigation

- executory arbitration: agree to arbitrate predates dispute, agreements to arbitrate are often contained in dispute resolution clauses of substantive contracts

-ad-hoc arbitration: Agreement to arbitrate made after a dispute arises
•Parties agree, in response to the dispute arising, to find an alternative to litigation to resolve conflict

Private: not under the auspices of public sector

Court-connected: nonbinding evaluation process under court auspices/supervision resulting in advisory arbitration award

Private judging (rent-a-judge): privately hired judge (usually retired judge) or referee provides arbitration with legal impact identical to that of litigation

- NOT arbitration in the conceptual sense, since it is nonbinding
- losing disputant has a right to a trial de novo

- retrial of a previously decided dispute, in which all of the legal and factual issues may be re-litigated and redecided

- in contrast with an appeal, in which only errors of law can be the basis to change the outcome

- arbitrator's decision is restricted to a range of possible outcomes that is determined jointly by the parties prior to the hearing
- reduces risk to the parties by giving them some control over the decision
- eliminates extreme awards

arbitrator must choose between the final settlement offers propounded by the disputants

- Variant of baseball arbitration in which the arbitrator renders a decision without knowing the final offers
- The award is the final offer closest to the arbitrator's decision

- Binding: outcome is binding on all disputants ("true arbitration")

- Incentive: Nonbinding evaluation in which the disputant who rejects the evaluator's decision is subject to a penalty

- nonbinding or advisory: Nonbinding evaluation in which the evaluator renders a decision, which may be rejected without penalty by either disputant (not really arbitration in the true sense)

1. creating the arbitration contract
2. demanding, choosing, or opting for arbitration
3. selecting the arbitrator or arbitration panel
4. selecting a set of procedural rules
5. preparing for arbitration
6. participating in arbitration hearing
7. issuing arbitration award
8. enforcing the award

- Agreement to arbitrate should be as clear and simple as possible

- should also be fair and impartial

- matters to be arbitrated should be set out explicitly

- expenses of arbitration should be shared (but not if its unconscionable- aka so unfair or unjust that it shocks the conscience)

- should set forth qualifications for arbitrator and means of selection

- specify whether discovery is permitted

- arbitration hearing(s) and duration, may be either scheduled or left to the discretion of the arbitrator

- Contract should address privacy and confidentiality

- Arbitrator's role in the process should be clarified (facilitative, judicial, hybrid?)

- which rules of evidence, if any, will apply?

- what documents will be accepted by the arbitrator?

- what is the nature of the arbitrator's award (only state the outcome or would reasons in support be required?)

- spell out the scope of reviewability and enforcement

- spell out which jurisdiction's laws will apply to resolving disputes - esp. if disputants are from different states or countries

- provisional remedies- such as preliminary or temporary injunctions while arbitration is pending. Arbitration agreements take away a court's power to intervene until after arbitration, so agreements which allow the court to act while arbitration is pending must be clearly stated.

- do the parties first want to consider mediation? If so, include a provision requiring it.

NEVER use an even number