Arbitration is an ADR process where parties agree to have their dispute resolved by an impartial third-party arbitrator. Procedures vary depending on the dispute, and mandatory binding arbitration clauses are common. Rules are established to ensure a fair hearing, and arbitrators have the power to reject irrelevant evidence. Most courts respect an arbitrator’s decision, and awards can be enforced by the prevailing party in a local court.
Arbitration is an alternative dispute resolution (ADR) procedure whereby the parties to a dispute, rather than pursuing a lawsuit in court, agree to have their case referred to an impartial third-party arbitrator who, after hearing the matter , issues a decision in favor of one of the parties. Arbitration procedures can vary widely depending on the nature of the dispute, the status of the parties, and whether the arbitration is mandatory or voluntary. The parties to a voluntary arbitration have considerable latitude, together with the arbitrator chosen to hear the case, to decide how the matter will be argued, including setting any procedural rules that will govern the conduct of the arbitration.
Many commercial contracts and some consumer contracts contain mandatory binding arbitration clauses that mandate arbitration in the event of a dispute. Some of these agreements designate a forum, such as the American Arbitration Association in the United States, under whose rules of procedure the arbitration will be conducted. In the absence of a designated forum, the arbitration procedure is determined by the arbitrator and the parties to the dispute. In certain circumstances, those obligated to arbitrate may choose to have the matter decided by a single arbitrator in a fast-track hearing. A panel of three arbitrators usually hears more complex cases.
Some industry and self-regulatory organizations provide detailed arbitration procedures governing the conduct of mandatory binding arbitration conducted in their forums. The rules of an arbitration procedure established are designed to ensure that those compelled to arbitrate their disputes receive a fair hearing. Such rules may include, in the initial stages, how the parties select arbitrators and the circumstances under which appointed arbitrators may be challenged, peremptorily or for just cause. Additional arbitration procedures may include the exchange of information between the parties before the hearing, as well as how to resolve any pre-hearing disputes.
Some forums specify rules governing the hearing arbitration procedure itself. These rules dictate whether opening or closing statements are allowed, how evidence is presented, and one party’s right to cross-examine an opposing party’s witnesses. Arbitration procedures in some forums may vary depending on the nature of the dispute. Some forums, such as the American Arbitration Association, have a separate arbitration process for consumer, labor, construction, and employment disputes.
Because arbitration is designed to provide quick and cost-effective resolution of disputes generally, arbitrators are usually not bound by the formal rules of civil procedure or the formal rules of evidence applicable in court proceedings. Arbitrators have the power to reject extraneous evidence or evidence that is clearly irrelevant to the issues they are deciding. In general, most courts respect an arbitrator’s decision. In the absence of bribery, fraud, or manifest disregard of the law by the arbitrator, most awards are successful and can be enforced by the prevailing party in a local court of competent jurisdiction.
Protect your devices with Threat Protection by NordVPN
