Arbitration

Arbitration is a non-court procedure for resolving disputes using one or more neutral third parties who are called the arbitrator or arbitration panel. Arbitration often allows disputing parties to resolve disputes more quickly and cheaply than by going to court. Instead of judges or juries, arbitrators decide if wrongdoing occurred and how to correct or compensate the wronged party for it.

When the arbitration is over, the decisions of the arbitrators are final and not subject to appeal. If one of the parties is unhappy with the result, that party cannot go to court to try his/her luck again. The arbitrator's decisions can only be challenged under very limited circumstances -- e.g., if the losing party can demonstrate that one of the arbitrators was biased. Such challenge must be made within three months or less through a motion to vacate.

Arbitration proceedings use rules of evidence and procedure that are less formal than those followed in trial courts, and this usually leads to a faster, less-expensive resolution. There are many types of arbitration in common use: Binding arbitration is similar to a court proceeding in that the arbitrator has the power to impose a decision, although this is sometimes limited by agreement -- for example, in "hi-lo arbitration" the parties may agree in advance to a maximum and minimum award. In non-binding arbitration, the arbitrator can recommend but not impose a decision. Many contracts -- including those imposed on customers by many financial and healthcare organizations -- require mandatory arbitration in the event of a dispute. This may be reasonable when the arbitrator really is neutral, but is justifiably criticized when the large company that writes the contract is able to influence the choice of the arbitrator.

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