Recently, this blog talked about how a professional football team is trying to get a legal dispute about their recent move to another market resolved in arbitration rather than litigation. While the previous post touched on the process, business owners in South Florida may want to know more about how arbitration works since it gets used frequently in contract disputes and other types of business litigation.
One key point to remember about arbitration is that it is a process to which all sides in a dispute must agree. Unlike mediation, a court cannot order parties to try arbitration instead of proceeding through a lawsuit. On the other hand, an agreement to arbitrate does not have to be at the time a dispute actually arises; businesses often agree in their contracts to arbitrate disputes even when they could come up years later.
A business’s contract will often describe how one business can invoke the arbitration process, although it will usually involve sending a written letter notifying the other side of the dispute and of the intent to arbitrate.
Both sides will typically have a hand in picking the arbitrator or panel of arbitrators to hear the case. Usually, an arbitrator is a person with some knowledge of the law that will be in play. They may also have specialized knowledge that is relevant to the dispute. For instance, a dispute about construction may include an engineer on the panel of arbitrators.
The process itself proceeds much like a trial, although formal rules of evidence and procedure will yield to the arbitrators trying to get to the bottom of the matter efficiently. Usually, the decision of the arbitrator will be binding and final, meaning that a losing side will find it difficult to appeal to a judge.