Arbitration is a process by which a neutral third party, the arbitrator, conducts a hearing where the parties present their cases to the arbitrator, who renders a binding decision based on the facts of the case and the applicable law.

The rules of evidence are relaxed and the parties have more latitude in speaking their minds than in a trial. Perhaps the biggest difference between arbitration and mediation is the fact that the arbitrator serves as the ultimate decision-maker whereas a mediator facilitates a final agreement with terms ultimately decided by the parties.

What Types of Cases Can Be Arbitrated?

As in the case of mediation, virtually any case that can be litigated can be arbitrated. Cases that are particularly suited for arbitration are highly technical matters where having an arbitrator well versed in the subject matter of the dispute is preferred by the parties.

What Are the Primary Benefits of Arbitration?

Affordability Substantial time and cost savings are typical of arbitration proceedings because the discovery and presentation of evidence is more relaxed than it is in a trial.

Arbitrator’s Knowledge of the Subject Matter In highly complicated or technical matters, the parties may prefer that someone with specialized knowledge regarding the industry in which their dispute is rooted make the final decision rather than a judge or a jury with no such background.

Closure If time is of the essence and closure is therefore an overriding concern of the parties, arbitration should be considered. Unlike mediation, which does not result in resolution of the matter 100% of the time, a decision will be made at the conclusion of the arbitration.

How Exactly Does One Get to Arbitration?

The two most common means by which disputing parties end up arbitrating are:

• In some contracts (namely, construction and commercial contracts), there is a preexisting arbitration clause that requires the parties to arbitrate after a dispute has arisen.

• As in the case of mediation, parties can simply agree to arbitration after a dispute or a lawsuit has arisen.

What Happens At the Arbitration?

The Hearing Generally, the hearing follows the order of a trial, meaning the parties may begin by giving opening statements, swear in witnesses, submit exhibits, conduct direct and cross-examinations and give closing arguments. However, depending on the style and preference of the arbitrator(s), there is much latitude in terms of how the arbitration may be structured. Sometimes a hearing is not necessary and the arbitrator will make his or her decision based solely on the affidavits and exhibits submitted by the parties.

The Decision Soon after the hearing, the arbitrator renders a final written decision that may be accompanied by an explanation, if requested. That decision is final, binding and subject only to limited court review.

What Factors Should Be Considered in Choosing an Arbitrator?

Once the parties have agreed in principle to the mediation process, they must agree on a mediator. Keeping in mind that the fundamental responsibility of the arbitrator is to render a fair decision based on the facts and the applicable law, questions to ask in the selection process include:

Reputation Does the arbitrator have a reputation for being neutral and having the highest integrity?

Experience How many arbitrations has the arbitrator conducted?

Subject Matter Expertise Would the dispute benefit from being arbitrated by someone with knowledge and experience regarding the subject matter surrounding the dispute?

Availability If time is of the essence, how soon can the arbitrator set your case for hearing?