What Are The Rules That Govern Arbitration In The US?

Do you not want to take your case to trial? Rather, do you want to opt for an alternate method to resolve a dispute? Well, you have come to the right place. Alternate methods to resolve a dispute have been around for centuries. There are records that show the use of negotiation, arbitration, mediation, and conciliation as early as in the Roman and Greek empires.

Amongst all the methods, arbitration holds a very special place in commercial litigation. It is a semi-formal method that has just the right amount of structure yet is flexible enough. So, let us find out more about it without further delay.

What Is Arbitration?

Arbitrations, what we also call private judging, are a resolution process for legal disputes. It involves a third and neutral party who acts as a private judge (hence the name). This third party, the arbitrator, carefully hears the argument from both sides of the conflict.

Who Is The Arbitrator?

After hearing all sides to the case and weighing the facts against laws and regulations, the arbitrator delivers a decision. In most cases, the decision is legally binding on all parties.  

What Is an Award In Arbitrations?

The decision, which we also call the “award,” has similar effects of a court judgment. Parties to a private judgment voluntarily select the process jointly. The arbitrator is of the choice of all parties present.

In the United States, all private judgments/arbitrations take place according to the rules and regulations of the American Arbitration Association. Arbitrations serve as a resort for people looking for a quick, private, and cost-effective method to resolve a legal dispute.

Arbitration is the method of choice for commercial disputes, contract-related disputes, and even family disputes. The only drawback that this method of alternate dispute resolution comes with is that is that it limits one’s ability to opt for a trial in court.  

Who Oversees Arbitrations In The USA?

In the United States, arbitrations’ rules and regulations come from the following bodies.  

a. The American Arbitration Association or the AAA

This organization sets up the rules and procedures for different types of arbitrations in the US. Be it the commercial type, construction type, or for employment-related disputes, the AAA sets up rules for it all.

b. Judicial Arbitration and Mediation Services, Inc

JAMS is another significant organization that assists with arbitrations and mediation in the United States. This body, however, has its separate sets of rules and procedures that ensure fair and just arbitrations to its clients.  

c. The Federal Arbitration Act.

This Act is a federal law that governs arbitrations in the nation. It mainly oversees arbitrations in contracts arising out of interstate commerce. It sets up limitations on the grounds which can allow courts to overturn awards in arbitrations.

What Are The Rules That Govern Commercial Arbitration?

Commercial arbitration rules in the United States come from different organizations and institutions. The legal system governing commercial arbitrations mostly follow the rules of the American Arbitration Association (AAA). These are some of the key features of the rules.

Beginning Of Arbitrations.

The whole process begins with the people in need file for arbitrations. It is a demand for the process that clearly specifies the facts and nature of the dispute. The demand also identifies the names of the parties and the relief they want. We can think of this demand as a formal complaint.

Appointment of Arbitrators.

The AAA’s role comes into play when the parties are choosing arbitrators. Parties ideally mutually agree on the choice. On occasions, they may even choose a whole panel of arbitrators. The selection process is very important for the kind of award that the parties will get later.

A Neutral Third Party/Arbitrator.

The AAA’s rules signify the importance of a neutral and unbiased arbitrator who has no vested interest or relation to the case. An arbitrator’s role is to simply evaluate the facts of the case. They go through the evidence and cases that both parties present.

Arbitrations’ Location.

The rules clearly state the location where the hearings will take place. The rules will decide the location to accommodate the needs of the parties to the arbitrations.

There Has to be a Preliminary Hearing.

A preliminary hearing can happen in person, over the phone, or by written means. The hearing will also touch up on procedural issues, timelines, legal issues. The identification of witnesses and evidence will also happen in this stage.

Document Exchange and Disclosure Stage

The AAA’s rules set up guidelines for the exchange of documents and also of disclosure. It gives all parties access to relevant information, evidence, and documentation regarding the case. A complete and transparent system is necessary.

Hearings.

The rules of the AAA also outline the protocols that conduct hearings in arbitrations. This will include the guidelines that govern the presentation of evidence, examination of the witnesses, and arguments.

Final Stage/Award.

After the arbitrations’ hearings are done, the arbitrator goes through all evidence, arguments, and witness statements of the case. Next, they declare the award in written form. It is the formal decision that embodies the resolution of the dispute.

Please note that an award contains the legally binding force of a judgment.

Cost Allocation According To The Award

The AAA has rules according to which the authorities allocate the costs to carry out the execution of the award. The costs cover administrative fees, fees for services of the arbitrator, and other expenses.

Conclusion

Now that we have reached an end to this article let us see why an arbitration agreement is better than a court trial. Arbitrations come with various advantages that litigation does not offer. It is, therefore, the choice for many as a method for dispute resolution. For starters, the process of arbitrations reaches the award stage much faster than litigation. Courts deal with a thousand lawsuits daily which can result in prolonged trials. in long delays. In contrast, arbitration is more flexible, less time-consuming and more