The Basics of Arbitration

ARBITRATION DEFINED

Arbitration is a process in which disputing parties present their respective cases by the use of evidence to a third party neutral, i.e. an Arbitrator, who renders a binding decision on the merits. (Arbitration, by agreement, can be handled on a non-binding basis.) The process is essentially an informal and private form of litigation and does not involve negotiation. Virtually any case that can be litigated can be arbitrated although cases affecting the rights of children may be subject to ongoing judicial review.

AGREEING TO ARBITRATE

Typically, parties agree to arbitrate by executing documents provided by The McCammon Group (The Group). The Group’s Agreement to Arbitrate is available in a short form and a long form, and both can be viewed at The Group’s website (www.McCammonGroup.com).

Alternatively, parties may obligate themselves to arbitrate by executing an external Agreement to Arbitrate not drafted by The Group. In such situations, The Group may serve as the arbitration service, but only in the following circumstances:

1. The provision must specify that The Group will provide the arbitration service.
2. The provision must specify that The Group’s rules, or some alternative set of rules acceptable to The
Group, will govern. (These rules would be the ones in use by The Group at the time the claim is
initiated with The Group. The dispute resolution clause should address this.)
3. One of the parties initiates the process by asking us in writing to proceed to administer the
arbitration; with a copy of such writing and a copy of the executed pre-dispute agreement to arbitrate
provided to the other party or parties involved in the dispute.
4. All parties must have actual notice of the initiation of the arbitration process. If the non-initiating
party is not responsive, there must be a showing by the initiating party that there was actual notice
provided to the non-initiating party regarding the initiation of the arbitration.
5. There are no known issues or conditions either in the Agreement to Arbitrate or in the surrounding
circumstances that would threaten the fundamental fairness of the process.
6. There must be adequate arrangements in place to pay for the services of The Group.

In the absence of satisfying all these requirements, the parties would be required to execute a new agreement to arbitrate satisfactory to The Group.

SELECTING THE ARBITRATOR

The parties always have the right to agree on the choice of an Arbitrator. When agreement cannot be reached, a selection process will be used.

PRE-ARBITRATION CONFERENCE

Before the arbitration begins, the attorneys -and the parties, if so desired- confer with the Arbitrator, typically by phone, to cover the particulars of the arbitration: anticipated duration, attendees, witnesses, exhibits, etc. Any other issues that are of concern to the parties can be addressed in the pre-arbitration conference. All these matters are handled in an informal fashion.

At the discretion of the Arbitrator, there may be reason to schedule other pre-arbitration proceedings to streamline the arbitration hearing. If it is deemed to be helpful, the parties may agree, or be asked, to submit prior to the arbitration various pleadings, documents, photographs, etc.

Unless the parties agree, discovery is not included in the arbitration process as conducted by The Group. However, the attendance of witnesses and the production of documents at the arbitration hearing may be compelled by subpoenas pursuant to governing law.

Often the parties arbitrate subject to “high” and “low” money limits to which the parties agree before the arbitration. Regardless of the Arbitrator’s decision, the award is constrained by these limits established by the parties. The Arbitrator does not have knowledge of the amounts or existence of these limits in issuing an award.

THE ARBITRATION HEARING

Arbitration is adversarial. Although it is relatively informal, arbitration is akin to litigation.

At the hearing the Arbitrator first explains the ground rules. Generally, the hearing follows the order of a trial; however, the process is informal and subject to the discretion of the Arbitrator. The parties may give opening statements. The cases are then presented, first by the plaintiff and then by the defendant. Rebuttal is allowed.

The nature of the presentation of the cases is similar to a court proceeding e.g., swearing of witnesses, direct examination, cross-examination, submission of exhibits. However, the formal rules of evidence do not apply. The touchstones of admissibility are relevance and common sense.

The parties may give closing arguments. Post hearing briefs may be used, when needed. These matters are handled according to the wishes of the parties subject to the Arbitrator’s discretion.

As soon as is reasonable after the hearing, the Arbitrator will render a decision in the form of a written award, a simple statement reflecting the resolution of the dispute. The grounds for the decision are the facts presented and the governing law. The right of appeal from this award is limited to those grounds embodied in the arbitration statute that governs the case. Typically, this means that the reasons to upset the Arbitrator’s decision would be limited to those few reasons stated in the governing arbitration statute. Agreements affecting the rights of children may be subject to ongoing judicial review.

THE PROS AND CONS OF ARBITRATION

The main advantage of arbitration is closure. Once the parties engage in the process, they know that resolution will necessarily result. They also know that there is little basis to upset the Arbitrator’s decision. In certain kinds of cases, closure may be the overriding goal of the parties, and thus arbitration offers this benefit.

In highly technical cases, the parties may wish to have a decision maker who is well versed in the subject matter in question. Arbitration allows this.

Given that no discovery is available without the agreement of the parties, substantial time and costs savings may be enjoyed in arbitration. The relaxed procedures also allow for savings.

As compared to mediation, arbitration does not allow the parties to keep control of the outcome, and it often does not produce the same level of benefits as mediation in respect to cost and time savings. Nor does arbitration allow the parties to benefit from the problem solving, relation-building processes of mediation. But, used in the right situations, arbitration can be a valuable tool among the various modes of dispute resolution available.

THE ATTORNEY’S ROLE IN ARBITRATION

Arbitration is adversarial in nature, and thus there are rules and techniques, informal as they may be, in play. It follows that the role of an attorney in this process is similar to the role of an attorney in litigation. Because arbitration, once engaged, necessarily results in a decision rendered by a third party neutral, appropriate preparation is needed.