Arbitration as an alternative to litigation and trial

The other tool in the Alternative Dispute Resolution arsenal is Arbitration. Arbitration involves a hearing before a third party (an arbitrator) which can involve, the testimony of witnesses as well as the presentation of documentary and tangible evidence.

If the parties cannot reach a settlement and want the opportunity to present their case to a third party decision maker, arbitration can be a cost and time effective alternative to traditional litigation and trial. Arbitration is usually agreed to by the parties at the outset of their relationship by contract. The parties can agree to any form of arbitration they choose, as well as the enforceability of the arbitration award and the right of appeal from an award.

The American Arbitration Association (AAA) www.adr.org, provides a mechanism and information for 1) drafting arbitration clauses in your agreement; 2) starting the arbitration process if a dispute arises; 3) proceeding in the arbitration process once an arbitration demand has been made.

The AAA provides for Regular Track Procedures, Fast Track Procedures (where no claim is greater than $100,000), Resolution through Document Submission Only (where resolution of the dispute does not require a face to face hearing), and Large, Complex Construction Disputes Procedures (where any claim or counter claim exceeds $1,000,000.)

Hi-lites of the Fast Track Procedure under the AAA:

  • Applies to two party cases where no party’s claim or counter claim exceeds $100,000.
  • Cases under $25,000 may be decided on a document submission only basis with no hearing unless requested by one of the parties.
  • Expedited time period for answer and counter claim (seven days from notice of filing of demand)
  • Each party is given the same list of 5 potential arbitrators from which the parties are encouraged to agree. If the parties can’t agree on one, they are to strike up to two names and list the others by preference.
  • Preliminary conference call scheduled within 10 tens of confirmation of arbitrator’s appointment.
  • At least five (5) business days prior to the hearing, the parties shall exchange directly between themselves, copies of all exhibits, affidavits they intend to submit at the hearing as well as the identity of all witnesses they intend to call.
  • No discovery, except in exceptional cases as ordered by the arbitrator.
  • Arbitrator sets the date, time and place of hearing.
  • Hearing is not to exceed one (1) day. Conformity with formal rules is not required for admissibility of evidence, which is controlled by the arbitrator.
  • Hearing to take place no later than 45 days after date of preliminary phone conference.
  • Arbitration award to be rendered no later than 14 calendar days from date of hearing.

There is an administrative fee required by the AAA (as there is with any private arbitration firm) and there is an hourly fee for the arbitrator that is shared by the parties.