Chapter 4 Alternative Dispute Resolution September 19th 2014 4 3 Arbitration Learning Objectives Explore the option of arbitration as an alternative dispute resolution ADR strategy Explore contemporary issues of fairness in arbitration Determine when arbitration is a viable option for dispute resolution Examine the benefits and drawbacks of arbitration as a form of ADR Parties vest authority in a third party neutral decision maker who will hear their case and issue a decision Arbitration Award Arbitrator s decision rendered after hearing the cases presented by the parties to an arbitration o Confirmed and converted into a judgment by a court Arbitration Arbitrators Preside over arbitration proceedings Neutral decision makers who are an expert in the law and subject matter at issue in the dispute Decision do not form binding precedent Members of the judiciary but in arbitrations they are not judges Act in an analogous capacity to judges in trials Certified by the state in which they arbitrate and they may arbitrate only certain types of claims Mandatory Arbitration Results when o Disputes arise out of a legally binding contract involving commerce In which the parties agreed to submit to mandatory arbitration o State law requires parties to enter into mandatory arbitration Mandatory Arbitration Clause Requires the parties to a contract that contains such a clause to submit to a mandatory arbitration in the event of a dispute arising under the contract o Frequently foreclose any possibility of appealing arbitration awards in court Prayer for Damages Litigant s request for remedy or judgment Voluntary arbitration exists in business disputes Arbitration Awards the courts Binding Outcome in binding on the parties without possibility of appeal to Nonbinding IN which the arbitration award can be appealed to a court Converted to a judgment by the court Confirmation Process by which a court converts an arbitration award to a judgment o Contemplated by the Federal Arbitration Act FAA and included in arbitration agreements o Most states have enacted versions of either the Uniform Arbitration Act Uniform statue adopted in whole or in part by some states which seeks to create uniformity in arbitration proceedings between states Revised Uniform Arbitration Act Revised version of the Uniform Arbitration Act Adversarial process like a trial and it will produce a winner and a loser More formal than negotiation and mediation Parties present their cases to the arbitrator by introducing evidence After both sides have presented their case the arbitrator issues an arbitration award Benefits Rules related to arbitration differ by state More expensive than negotiation or mediation but it is less expensive than litigation Faster than litigation but it is not as private as negotiation or mediation Arbitrators are subject matter experts in the legal area of dispute Visible Option for Dispute Resolution Business to Business B2B arbitrations are perceived as fair o Subjects of disputes are commercial issues which may not implicate deeper social and ethical questions o Contract disputes between businesses might involved whether goods are conforming goods or nonconforming goods under the Uniform Commercial Code UCC Issues of fairness arise in business to employee B2E and Business to Consumer B2C situations o Parties with unequal bargaining power have entered into a contract that contains a mandatory arbitration clause If a dispute arises and mandatory arbitration is commenced then unequal power between parties with continue to be an important issue
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