Tom Harrigan, Attorney at Law | Minneapolis, MN
Arbitration Overview & Definitions
Neutral Arbitrator Thomas G. Harrigan
Arbitration is one of the two most common methods of Alternative Dispute Resolution (ADR), with Mediation being the other. Like other forms of alternative dispute resolution, the parties involved resolve their dispute outside of the federal and state judicial systems rather than litigating in the court. Arbitration is the process by which an experienced legal professional hears a dispute and makes a ruling concerning the dispute. Arbitration can be either binding or non-binding. Binding arbitration is final and generally cannot be appealed. Non-binding arbitration is generally mandated by the courts and can be appealed. Arbitration has long been used in labor, construction, and No-Fault disputes, but is now gaining popularity in other types of disputes.
Arbitration is a time-tested, cost-effective alternative to litigation. Arbitration is the submission of a dispute to one or more impartial persons for a final and binding decision, known as an "award." Awards are made in writing and are generally final and binding on the parties in the case. Studies comparing arbitration and litigation reveal that arbitration is fair to individuals and businesses. Arbitration reduces the time needed to resolve disputes.
Traditionally, if individuals or businesses could not resolve a conflict through negotiation or mediation, it was necessary to file a legal claim. Filing a legal claim was viewed as a difficult process because it took time to prepare the claim to be filed and to secure witnesses and documents. In addition, significant expenses were incurred for filing fees, discovery costs, and attorney’s fees. Today, parties to a dispute can use arbitration to avoid the expenses and headaches of traditional litigation. The decision to use arbitration may be the result of a private agreement between the parties, a requirement of state or federal law, or an order by a court.
Disputes are brought before a neutral third party (the arbitrator) who, after carefully reviewing all of the relevant information, issues a final decision in favor of one of the parties. Consumers, businesses and even courts themselves have successfully used arbitration programs to resolve disputes. Generally, there is widespread satisfaction with the process. Arbitration offers parties a decisive legal outcome to their dispute without the expense and inconvenience of court proceedings and large attorney fees.
Generally, arbitration as a method for dispute resolution is more casual and faster than going to court. The majority of certain kinds of cases are resolved through arbitration (e.g. No-Fault automobile cases). The parties may present their claims in arbitration without the assistance of an attorney; however, many parties find that using a lawyer gives them an advantage in the arbitration process.
Arbitration begins when one party makes a request for an arbitration. The arbitration request does not generally require any specific legal form, although supporting documents are generally included. If there is no prior agreement the requesting party would need to obtain a signed arbitration agreement from the necessary parties, in which the parties agrees to submit the dispute to arbitration and to be bound by the results.
Arbitration: A statutory method of resolving disputes between parties, by which disputes are referred to an impartial third person for resolution; a substitute for jury and judge.
Arbitrator: The professional who makes a decision based on the evidence and testimony presented by the parties.
Award: The arbitrator’s subsequent decision, which is made in writing and is enforceable in court under state and federal statues.
Hearing: A proceeding wherein the evidence is taken for the purpose of determining the facts of a dispute and reaching a decision based on the evidence.
Parties: Two or more persons or entities involved in a dispute.
Arbitration Agreement: An agreement to arbitrate can be made prior to or after a dispute develops. All that is necessary is for the parties to agree to bring their case to arbitration and to agree to the terms and conditions of the arbitration.