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Arbitration: Decision by the Village Elder

Posted by attorney Christine Branstad

Arbitration and mediation are NOT the same even though they are both considered forms of alternative dispute resolution (ADR). Many myths surround arbitration.

Benefit 1: Arbitration may take less preparation because you do not need to plan for a jury trial. Arbitration eliminates jury studies and preparing for mixed experiences of juries. Preparation is still extensive. (Then again, solid attorneys are fully prepared before entering mediation.)

Myth 1: You can “wing" arbitration. Arbitration requires knowledge of the facts and the law of your case. Arbitration requires a different type of preparation than trials because (if done properly) the case will be decided by an expert in the subject matter. Think of it this way: As an architect, you can explain your building design by educating a layperson about the general principles and then the specifics. Explaining the same design to another architect can be done more quickly and artfully, however it will require detailed preparation to be persuasive to another expert.

Benefit 2: Arbitration may eliminate much of the waiting time. Some of my cases took longer to reach trial than a good cheese takes to age. Arbitration may eliminate much of the waiting time.

Myth 2: Arbitration is often instant. ‘nuff said.

Benefit 3: Arbitration allows the parties to narrow the issues and get to the point.

Myth 3: Arbitration is as casual as Friday. Arbitration comes in as many styles as clothing. The parties may agree that the arbitrator has great discretion and may base the decision on “anything" or the parties may have four pages of rules, and require the arbitrator to set out findings of fact and legal reasoning. The parties may waive appeal or may set out specific appeal procedures. The parties may also waive evidentiary rules or even add new ones.

Benefit 4: Arbitration often gives you final resolution.

Myth 4: I can appeal an arbitration award against me and have it reversed. Generally, an award is final and binding and can only be reversed or vacated by courts in very limited circumstances, See I.C.A. § 679A.12.

Benefit 5: Arbitration may be flexible.

Myth 5: Arbitration is either mandatory or discretionary. Look at your contract. If you have agreed to a specific form of arbitration, you may be stuck with that form. If not, you may have some leeway to determine certain aspects the arbitration.

Benefit 6: Arbitration may be used to decide only one or two issues instead of an entire case. For example, the parties want one expert (instead of a jury) to determine who is responsible for a building collapse. The parties then want a jury to determine damages.

Myth 6: You have to decide in advance if you want mediation or arbitration. The parties may decide prior to mediation that, if they don’t agree, they want to put the decision in the hands of the mediator (med-arb). If the mediator agrees, that decision may be made mid-process.

Benefit 7: Arbitration may allow you to get a real expert in the area. There are attorneys who only arbitrate construction cases or who only arbitrate specific business claims.

Myth 7: The arbitrator must be a lawyer. Although I often believe an attorney is the best arbitrator, there are times when a chemist, engineer or fire expert may be better suited to interpret technical information. In those cases, the expert may serve as the sole arbitrator or may work with a lawyer to decide the case.

Benefit 8: Arbitration may provide the parties with some limits. The parties can do anything from agreeing to a floor and ceiling on the award (high-low arbitration) to providing the arbitrator with only two options (pendulum arbitration).

Myth 8: You can gain or lose as much in an arbitration as a trial.

Benefit 9: Arbitration is a cost savings.

Myth 9: Arbitration is cheap. See Myth 1.

Benefit 10: You may negotiate confidentiality into the process and the final decision. Court cases are usually open records and proceedings are public. Arbitration usually allows the parties to agree to maintain confidential proceedings and/or outcomes.

Arbitration clauses are also increasingly being thrown into the fine-print of many consumer contracts (read one of your credit card agreements), website click-through agreements (see previous blog about reading what you sign/agree to), and sealed user manuals that come with products (pretty hard to meaningfully agree to arbitration if you have to purchase a product in order to read the agreement).

Searching for the right arbitrator can be similar to searching for a mediator. Ask trusted advisers, research credentials. If you use an organization to find an Arbitrator, make sure the rules fit your case.

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