What is arbitration?
Arbitration is a method of dispute resolution in which a neutral third party,
an arbitrator, conducts an evidentiary hearing and/or reviews written submissions
from the parties. Upon consideration of the evidence, the arbitrator makes
a legally binding decision which can be enforced in the same manner as a
civil court judgment.
Arbitration differs from mediation in that once you enter the arbitration
process, you are bound by the arbitrator's decision. Mediation is a negotiation
process, in which the mediator helps the parties negotiate a mutually acceptable
How does arbitration work?
Arbitration conducted through United States Arbitration & Mediation
is governed by theapplicable USA&M Rules of
Arbitration. The Commercial, Employment and Personal Injury Rules of
Arbitration provide an administrative structure for the arbitration, including
a method of selecting a mutually acceptable neutral arbitrator. The selected
arbitrator then rules on pre-hearing disputes or questions, conducts the
arbitration session, and issues a binding decision or award.
Arbitration hearings are attended by the parties involved, their attorneys,
the arbitrator, and the parties' witnesses. Each party makes an opening
statement, presents evidence, questions and cross examines witnesses, and
makes a closing statement. During this presentation, formal rules of evidence
generally do not apply. Alternatively, arbitration can be conducted with
written submissions only in appropriate cases. The arbitrator then renders
his or her decision or award.
What are the benefits of arbitration?
Arbitration provides distinct advantages over the court system in many different
types of disputes. Because arbitration is a private method of settling disputes,
parties can tailor the arbitration proceeding in almost any manner they
choose. For example, parties involved in arbitration can agree to limit
the number of witnesses each side will present, set parameters on the amount
and type of evidence that will be presented, and pre-determine what issues
the arbitrator's award should cover.
Another important benefit of arbitration is its ability to provide the
parties with an arbitrator experienced in the subject matter of the dispute.
Many cases involve complex evidence, testimony, and documents. The arbitrator's
knowledge allows for a quick understanding of the issues, which in turn
saves time and expense.
Because they are conducted by private agreement, arbitration hearings
are not open to the public and the decisions reached are generally not matters
of public record.
What is high-low arbitration?
In High-Low arbitration, the parties mutually establish, prior to the hearing,
a range in which the award must be. lf the arbitrator's decision is between
the high and the low figures, that amount is the final award. However, if
the award is above the pre-set maximum, it automatically moves down to the
previously agreed-upon high figure. Conversely, if the arbitrator's decision
is below the established minimum, the award moves up to the predetermined
low figure. In most instances, the parties agree to not inform the arbitrator
of the range of their High-Low agreement.
Is arbitration final?
Arbitration awards are final and binding on all parties to the arbitration,
and may not be appealed except under very limited circumstances provided
by statute. Awards may be confirmed in any court having jurisdiction and,
thereafter, carry the same force and effect as an original court decision.
USA&M Rules of Arbitration include an Internal
Appeal Procedure, but it does not apply unless the parties specifically
so state in their Contract to Arbitrate.