What is arbitration?
Arbitration is a private, sometimes binding, form of dispute resolution, which is often used by commercial enterprises to resolve disputes outside of the public court system. Generally, it is the result of a dispute resolution clause in a contract specifying that if an individual or business wishes to sue the company, arbitration is their only option.
A single arbitrator a panel of arbitrators (often called “neutrals” or a “arbitral tribunal”) conducts the proceeding and renders a binding decision based on the authority granted to them in the contract. This may include the application of legal standards and certain equitable considerations.
A typical “arbitration award” will require one of the parties either to pay money, or damages, to the other party, grant injunctive relief to the other party, provide specific performance requirements toward a contracted obligation, or amend a document through rectification. If the arbitration is binding, the award will also be confirmed by a court and become a “court judgment.”
It is highly unusual for a court to vacate the arbitration award, but there are some circumstances where a court will undo the arbitrator’s decision.
How can one prepare for arbitration?
Before going into arbitration, an arbitration lawyer will help select the arbitrator, develop a “Statement of Claim” or “Statement of Response,” conduct discovery and hold depositions, in much the same way they would prepare for litigation. The only difference is that when the case goes to arbitration it does not happen in a courtroom with a judge and jury.
Rather, an arbitrator or panel of arbitrators will review all the facts of the case and make a final decision based on the evidence presented.
What are the advantages and disadvantages of arbitration?
When the parties in a dispute prefer to engage in a more private and voluntary resolution process, arbitration can have many advantages.
For instance, in addition to choosing an arbitrator who is already familiar with the subject matter, the parties have the ability to determine the scope of an arbitrator’s powers. Also, because it is a private proceeding the parties can avoid the public filings associated with traditional court case.
Lastly, arbitration offers a much faster solution, making it far less expensive than litigation.
Some of these advantages may also be seen as disadvantages. For example, some people may prefer a more public courtroom proceeding as it is usually provides a stronger incentive for settlement. It is also very difficult to appeal an arbitration award, as most courts will defer to the arbitrators’ judgment.
Our experienced New York arbitration attorneys offer a wide range of guidance and representation with the goal of avoiding the time, publicity, and expense of traditional court litigation.
Resources
Arbitration and Mediation
Mandatory Arbitration – NY CourtHelp Unified Court System
NY Courts Guide | Alternative Method of Dispute Resolution by Arbitration
American Arbitration Association – Consumer Arbitration Rules
American Arbitration Association – Commercial Arbitration Rules
Practical Arbitration – Basic Guide for Non-Attorneys
Commercial Arbitration Guide for Businesspeople
Consumer Arbitration as Alternative Dispute Resolution Mechanism
Using NYS Arbitration Program
Alternative Dispute Resolution: Handbooks and Treatises
Drafting Arbitration Agreements: Guide for Consumer Credit Contracts
