What is Arbitration: Know All About The Alternative Dispute Resolution Method!

Do you want to avoid taking 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. Some records show 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 with just the right structure, yet it is flexible enough. So, let us find out more about it without further delay.

What is Arbitration: Understanding All About It!

Arbitrations, called 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.

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

The decision, which we call the “award,” has similar effects as a court judgment. Parties to a private judgment voluntarily and jointly select the process. 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 are a resort for people looking for a quick, private, and cost-effective legal dispute resolution.

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

Who Oversees Arbitrations In The USA?

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

• The American Arbitration Association or the AAA: This organization sets up the rules and procedures for different types of arbitrations in the US. The AAA sets up rules for it all, be it the commercial type, construction type, or employment-related disputes.
• Judicial Arbitration and Mediation Services, Inc: JAMS is another significant organization that assists in arbitration and mediation in the United States. However, this body has separate rules and procedures that ensure fair and just arbitrations for its clients.  
• 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 allowing 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 follows 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 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 with 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 parties’ needs in 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 discuss procedural, timelines, and 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 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 arbitration hearings, 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 for which the authorities allocate the costs to execute the award. The costs cover administrative fees, fees for the arbitrator’s services, and other expenses.

Resolve Your Dispute

Now that we have ended 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.

The arbitration process 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

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