Arbitration is a process where a professional neutral arbitrator administers
a process to hear the evidence from the parties in a dispute, and issue
a decision on the legal or contractual merits of the claim. Arbitration
can resemble an abbreviated litigation procedure before a judge, but the
arbitrations are often private processes that occur outside of the
state or federal courts. The arbitrator
may be an independent private arbitrator, or may be associated with a large
private arbitration service like the American Arbitration Association, or JAMS.
the parties in an employment relationship have a written contract that
requires the parties to participate in arbitration of disputes, or they are
covered by a union collective bargaining agreement the provides arbitration.
these "contractual arbitration" procedures begin when a party requests to
aribitrate a dispute under the contract. The precise procedure that will
be followed varies with the arbitration agreement, and the private
arbitrator or organization that provides the
arbitration program. Initially, there will be a mechanism for the parties
to select an arbitrator to hear the dispute. The arbitrator
then leads the arbitration, which may include pre-hearing telephone conferences
with the parties regarding scheduling and the procedures that will be
followed. Then the parties usually engage in limited discovery of evidence,
which may include requests for information and documents from the opposing
party, and depositions
where the parties are questioned and recorded. Then an
arbitrator holds a hearing where
the parties present their evidence and make their arguments to the arbitrator,
and question the opposing parties and witnesses.
may have the parties submit written briefs about the case before and after
Then the arbitrator will evaluate the evidence and
issue a written decision (also called the arbitration "award"). If the decision is
in favor of the employee, the
arbitrator may order the employer to provide monetary damages and other
remedial relief. Sometimes
the winning party may seek to have a court confirm and enforce the
arbitration award, or the losing party may seek to have a court vacate
or correct the arbitration award. The court may have limited authority under the law
to review the arbitrator's decision for errors of fact or law.
Some rules of courts and state laws require that the parties in litigation
"judicial arbitration" of certain litigated matters before
a trial is conducted. The decisions resulting from these judicial
arbitrations may or
may not be binding on the parties. Some state laws provide for binding
judicial arbitration of cases where the amount of money in controversy is
small (for example, less than $50,000).
The arbitrations required under rules of courts may be non-binding on the
who may elect to have a court trial after the arbitration. The purpose of
these non-binding arbitrations is to
enable the parties to present and assess evidence about the case, and
evaluate the settlement value of the case, and have a neutral fact-finder
state an opinon on the legal merits of the case.
Advantages of arbitration are that it is usually shorter and less expensive
than litigation, a decision is made on the merits of the claim, and
the arbitrator may have subject matter expertise in the field of the dispute.
Disadvantages of arbitration may be that limited discovery does not allow
the parties to sufficiently develop the evidence, some attorneys assert
that arbitrators may favor parties who have repeat business with them, and
the parties may not have the right to appeal the arbitration decision to court.
The cost of an arbitration varies with the type of arbitration and arbitrator
involved. The arbitration of a complex matter can be expensive. Often the
arbitration contract will specify who pays for the
arbitrator and expenses. Sometimes the parties have agreed to equally split
the cost of the arbitration. Sometimes the arbitration agreement allows the
winning side to seek recovery of attorney fees and costs from the losing side.
Some courts have held that the employer has to pay for the cost of an arbitration
that is required by an employment agreement.
The parties in an arbitration may not have to be represented by attorneys,
but it is usually advantageous to have legal representation. The law
regarding arbitrations, and the legal issues related to
the cases being arbitrated, are complex and evolving. There is federal
law regarding arbitration, like The Federal Arbitration Act. There
may also be state laws regarding arbitration, like the California
Arbitration Act. There have been
many court decisions, and sometimes conflicting decisions, about whether a
party can be forced to arbitrate employment-related claims.
Some government agencies like the EEOC have taken the position that an
arbitration agreement does not preclude an employee filing a discrimination
complaint with the agency. There have been court decisions holding that
some unfair ("unconscionable") or one-sided arbitration agreements cannot be
enforced. There have also been court decisions holding that some arbitration
agreements can be rescinded if they result from fraud, undue duress, or
mistake. Consult with an attorney
if you have questions about whether you can be required to arbitrate,
the arbitration agreement and procedures, and the binding effect of arbitration decisions.
As with other legal processes, it is important that the parties know and
comply with the time limits that are applicable to the arbitration. If
the required time limits are not met, a party may be disadvantaged in
the arbitration, or lose the right to arbitrate or litigate a dispute.
If you have questions about arbitration, you can find additional information
through the links on this website, and you can ask an attorney or arbitrator,
or the organization that sponsors the arbitration program.
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