Arbitration is a type of alternative dispute resolution process in which parties that have a legal dispute forego the court process and submit their case to an arbitrator or arbitration panel to decide the matter. Arbitration is still litigation since the parties will want to conduct the usual discovery including requesting relevant documents, submitting interrogatory questions, and taking depositions. However, the parties have the ability to mutually select an arbitrator that they feel will be impartial and fair and may restrict the issues to be decided and modify the rules of evidence and procedure by agreement.
The prime advantage of arbitration is that it is generally less expensive and gets your dispute resolved much faster without the constant delays that characterize most courts because of lack of courtrooms, judges and the flood of litigants waiting for their day in court, which can take years in some cases. The testimony of experts can be submitted by report or deposition transcript that can save litigant thousands of dollars and without worrying about subpoenaing witnesses or their availability. The parties can decide when it is time to arbitrate and not be concerned with the vagaries of jury selection, juror improprieties, or a judge’s schedule. Should the parties wish to delay a hearing, they can do so on their own terms.
The arbitration process consists of:
- The parties agree to binding arbitration
- They select a mutually acceptable arbitrator and agree to split the fees equally or have the losing party bear the costs
- Deciding on which issues to arbitrate; agreeing on which facts are not in dispute
- Crafting an agreement on how evidence will be handled–live testimony or by deposition transcripts, exhibits, and submission of documentary evidence such as medical records and reports, employment and school records without the need for formal foundation requirements, or reports or testimony submitted with notarized affidavits and under penalty of perjury
- Any other conditions such as length of time to present a case or presentation of the issues
An arbitrator’s finding or verdict is binding and generally not subject to appeal unless the aggrieved party can demonstrate undue bias, fraud, corruption or partiality on the part of the arbitrator.
In theory, any legal matter in dispute can be arbitrated. The following are examples of legal issues or cases and options that are more commonly arbitrated in lieu of formal litigation:
International Arbitration Case
Countries with border and treaty disputes often look to the international arena for resolution. For example, China and the Philippines have been arguing over territorial rights in the South China Sea for several years. The Filipino government wants the arbitral tribunal formed under the United Nations Convention on the Law of the Sea (UNCLOS) to arbitrate the matter. Any decision would be binding in both countries. But to get to the arbitral tribunal, China has to agree to its jurisdiction even though it and the Philippine government ratified the UNCLOS. China believes it has undisputed sovereignty in this area and is resisting compulsory arbitration though it has not ruled out alternative dispute resolution measures such as a conciliation commission, Further, the arbitral tribunal has yet to accept jurisdiction over the issues, which could affect the future validity and enforceability of international law.
This case highlights the high stakes involved in certain arbitration matters but also the uncertainties of international law and the viability of tribunals that many nations hoped would be an alternative to the use of force.
Arbitration may be a sound and practical alternative to formal litigation for personal injury cases. As indicated above, most litigants do not want to wait for years to have their cases resolved, especially if the sole or main issue is one of damages. If a party was seriously injured, then medical expenses and the loss of income can overwhelm a family that cannot be made up through medical or disability insurance or other plans. Insurance companies are also motivated to resolve claims quickly in most cases.
There is a movement to have medical negligence or malpractice claims resolved by arbitration. When signing up for a plan, consumers often have the option of resolving a medical malpractice allegation by arbitration. Most choose arbitration since trials and courts are intimidating, costly, and can take years to get their case to trial. Some observers feel that consumers often receive less in compensation, if at all, in medical negligence cases decided by arbitration but most cases with compelling evidence will generally result in reasonable compensation for the claimant.
Personal injury cases have common issues: liability, whether the alleged injuries were caused by the accident or the defendant’s negligent conduct, and the number of damages. Typical examples of personal injury cases along with medical malpractice that are arbitrated include:
- Car accidents
- Premises liability (slip and fall)
- Dog bite cases
- Product liability
Instead of arbitrating the entire matter, though, the parties may elect to pursue certain options not available in regular litigation. For instance, the parties may agree on a floor and ceiling amount and may forego arguing liability. The low might be $50,000 and the high $300,000. The arbitrator is not advised of this arrangement, only that damages are to be decided. If the verdict is below the floor, the plaintiff takes the $50,000. If it is above $300,000, the award is reduced to this amount.
In the alternative, the parties may wish to only argue liability and may have decided on damages. In any issue regarding liability, an arbitrator may decide that the plaintiff was comparatively negligent so that the agreed upon damages is reduced by the plaintiff’s degree of comparative fault. In Arizona, a plaintiff can recover compensation even if he or she was 99% at fault.
The arbitrator is usually a retired judge or attorney familiar with personal injury law and the principles applicable to the type of action. An arbitrator is usually given up to 30-days to issue a ruling and may even ask the attorneys for clarification of some issues while deliberating. In all, arbitration can be a very practical and less costly alternative to formal litigation that can still include all the necessary discovery and protections found in a regular court while expediting the process in a manner controlled by the parties to a certain degree.