Arbitration is an adversarial process whereby Benson Mediation, as a neutral third party, is empowered to decide the outcome of a dispute. It is often a preferred means of resolving conflicts when one or both parties want to avoid a trial by jury for any reason. Although often described as faster and less expensive than trial, it is usually neither, and can be much more costly and time consuming if you don’t choose your arbiter carefully.
When parties submit their dispute to arbitration, they agree to be bound by and comply with the arbitrator’s decision, also called an award. The award is given after each side presents evidence and witnesses, and has the same force and effect as a contract in writing between the parties. The award can later be confirmed or vacated by the court based upon a petition by the prevailing or non-prevailing party. Once confirmed, the award is entered as a judgment.
While we have all heard that arbitration is cheaper and faster than litigation, it isn’t necessarily true. When it comes to being cheaper than arbitration it is almost never true. If you think about it, it makes sense. In a trial, our tax dollars are paying for the litigants to have a Judge to preside over the hearing. If you have ever served on a Jury, you know they are definitely not making the big bucks for hearing a case. In an arbitration on the other hand, you at least will have one “arbiter” that is charging for every minute they are engaged in reviewing, analyzing or hearing the evidence in the case. Most of that takes place outside of the hearing, meaning you are being billed when you are not even before the arbiter. In some cases, the arbitration agreement may call for 3 arbiters. In that case, you have 3 people who are likely either retired Judges or attorneys, that have seen it all and heard it all before, who collectively are billing well over $1,000/hour to review, analyze and hear the evidence of the case. At trial, at the time of this writing, you pay $224.00 to file the Complaint and $190 to demand a jury. This cost is usually eclipsed with one hour of arbitration time.
While it is extremely rare to have an arbitration that is less expensive than trial, for the reasons set forth above, arbitration can be much faster than going to trial. In our justice system, anyone charged with a criminal offense has a right to a quick and speedy trial. The same is not true for civil litigants. If you are involved in a large complex construction defect case or other complex matter that requires more than a couple days of Court time, your trial date is definitely taking back seat to any criminal trials ahead of you on the docket. In some jurisdictions a civil trial may make it to the trial calendar within a year. In some cases the Court are compelled to set the trial date within a year. However, it is common in those jurisdictions to have your trial date get “kicked” several times spanning months and more commonly years. An arbitration can be streamlined to get to resolution in a much shorter timeline.
The parties are encouraged to work together peaceably and often participate in structuring the resolution, which avoids the escalation of anger and hostility often associated with litigation. Since arbitration is a less formal and more flexible process, it is typically faster than the more cumbersome court process. Unlike trials, arbitration proceedings can be scheduled around the needs and availabilities of the parties (depending on the availability of the arbitrator). There are more simplified rules of evidence and procedure. The convoluted rules of evidence do not apply and the right to discovery – often criticized as a delaying and game-playing tactic – is either limited by the parties’ agreement or is at the arbitrator’s discretion. There are limited grounds for judicial review in order to effectuate the parties’ agreement that the award be final. The parties select their arbitrator directly, enabling them to pick someone with the requisite amount of background, experience and subject matter expertise to render an accurate and appropriate award.
The arbitration process can be private and confidential.
Most cases Benson Mediation comes into contact with are in arbitration because of a contractual provision. Many general contractors and material suppliers require arbitration, or a simplified form that may be limited in time and scope. Similarly, most homeowner associations have an alternative dispute resolution forum specified in their governing documents. These documents are created by the developer of the project initially and usually contain an arbitration provision. Homeowner Associations used to amend out those provisions after taking over control from the developer during the transition process. However, recent Court decisions have limited an HOA’s ability to unilaterally amend their documents. As such, more HOA cases are subject to arbitration than ever before. These HOA cases all result in arbitration as a result of contractual arbitration agreement that was written into the documents typically before they were homeowners.
In these contractual arbitrations, the parties have agreed pursuant to an arbitration provision in their contract that in the event of a dispute, the matter will be resolved by arbitration. In most cases, arbitration related to a contract is legally binding. Courts will routinely enforce arbitration provisions as it serves the Court’s top priority…getting cases off the docket. Any party that is the subject of an arbitration provision in a Contract may make the arbitration demand. In certain cases there are conditions precedent to making the demand. For instance, some arbitration provisions first require the parties to submit the claim to mediation as a condition precedent to the arbitration demand. Absent such a condition precedent any party can make the Arbitration demand by contacting Benson Mediation and providing the Contract with the ADR provision.
Arbitration can be structured in a number of ways. Most commonly, an arbitrator will listen to evidence and arguments from both sides regarding the dispute. The arbitrator will then come to a decision and issue an award that is final except for certain extraordinary circumstances. In contractual arbitration, a set of rules or procedures has been incorporated into the arbitration clause that dictates how the parties will proceed.
Absent a contractual provisions, the parties to a dispute may submit to arbitration by agreement of stipulation. Arbitration by stipulation is based on a post-dispute agreement between the parties whereby they have agreed to arbitrate their dispute after it has arisen. The parties must then choose which set of rules and procedures to follow to guide the proceedings. Arbitration by stipulation is typically binding and the arbitrator’s award is final except for certain extraordinary circumstances.
To begin the arbitration process, a claimant submits a demand for arbitration, stipulation to arbitrate or court order to Benson Mediation, LLC., and the opposing party (respondent) may file a response to the claim. The neutral arbitrator collects evidence and hears arguments from both parties, and then issues an award. Pre-hearing conferences determine procedural matters for the arbitration hearing (such as whether the arbitration is to be confidential). At the arbitration hearing, the parties present opening statements, evidence such as documents and tangible objects, and witnesses who testify and are cross-examined. Closing arguments may also be presented at the hearing, or submitted afterwards in the form of a post-hearing brief. The arbitrator will then issue an award. The arbitrator’s award consists of a written decision, which may simply consist of a statement of the relief awarded to each party, or it may include a written explanation of the arbitrator’s findings. Appeal or review of an arbitrator’s decision is limited and must be based on extraordinary circumstances