Arbitration
Laws exist to promote structure, order, and fairness. Nevertheless, disputes arise. Though they may be resolved or settled by different means, such as an informal agreement, at times, arbitration is used.
Arbitration is a means to settle disputes outside the courtroom. The opposing parties select and pay for an arbitrator(s) to resolve their conflict. Arbitration generally is less formal than a hearing or trial inside a courtroom but is usually more formal than a mediation or a negotiation. In most instances, arbitration is used as the conflict resolution method because there is an arbitration clause in a contract between the opposing parties. Thus, arbitration is used because both parties are contractually obligated. A contract’s arbitration clause can be simple and straightforward, or it can be complicated. For example, it simply could state that any and all disputes are to be resolved through arbitration and that the arbitrator’s decision is to be enforced by a local court. Conversely, an arbitration clause could dictate how the arbitrator is selected, where the arbitration is to take place, who is to pay attorneys’ fees, and whether the arbitration will or must remain private and confidential.
When part of a contract, arbitration is usually mandatory, and the arbitrator’s decision ordinarily is binding. When arbitration is mandatory, usually any and all conflicts between opposing parties are required to be settled through arbitration and the parties involved must relinquish their right to take a lawsuit against each other, to partake in a lawsuit, or to appeal the arbitrator’s decision. Conversely, when arbitration is voluntary, opposing parties agree to use arbitration as their conflict resolution method after considering their other resolution options. Thus, when it is voluntary, arbitration is a choice and not a requirement. Similarly, when arbitration is binding, the arbitrator has the final say and a court very rarely can overrule his or her decision.
Like everything else in life, there are advantages and disadvantages with arbitration. When two businesses negotiate and agree to arbitrate, it truly is a mutual decision and the businesses understand the risks and limitations. Typically, however, a substantial business inserts a mandatory arbitration clause in a contract, and the consumer signs the contract but is unaware of the rights he or she is giving up – usually a right to file in court, the right to a jury, the right to participate in class actions, the right to appeal, the right to special damages, and more. The arbitration clauses are drafted by the substantial business to protect its interests and severely restrict a consumer’s or small business’s rights. Often, from a consumer’s viewpoint, the arbitration clause is one-sided and favors the substantial business. Arbitration can be disadvantageous because it means that the parties involved have limited options and tactics, that the battlefield often is uneven, and that it is not inexpensive.
Arbitration clauses generally disfavor the consumer. Although arbitration remains private, the arbitration records are usually inaccessible to the general public, and this public inaccessibility differs from court cases, which generally are publicly accessible. Arbitration is expensive because it costs to initiate arbitration, to pay the arbitrator’s fees, and to have administrators to file and keep track of the arbitration records.
If you are in legal trouble, arbitration might be required. You can still fight and have recourse. But you should consult with an attorney first. Also know this: You have rights, and there are other legal remedies available. For more information, contact Nashville Attorney Perry A. Craft.
Perry A. Craft has dedicated his life to helping people in need. He has tried, settled, or resolved numerous civil and criminal cases in State and Federal courts, and has represented teachers and administrators before school boards, administrative judges, and the state Board of Education. Learn more about Attorney Craft.