[ ahr-bi-trey-shuh n ] SHOW IPA
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the hearing and determining of a dispute or the settling of differences between parties by a person or persons chosen or agreed to by them
A contract that includes an agreement to arbitrate disputes typically outlines some key aspects relating to any potential future arbitration. The rules and procedures that will be used in an arbitration are typically part of this agreement. If an outside (third party) service will be used to handle an arbitration (Construction Dispute Resolutions of Iowa -CDR), the contract may specify whether that service's already-established rules and procedures will be used. Because of the variety of arbitration services, as well as the flexibility provided to parties to draw up their own rules, there is no single set of rules or procedures that apply to all arbitrations. Arbitrators can use their own set of established rules as dictated by the contract. However, regardless of the rules used, the following are some of the key issues that are typically addressed:
The parties typically outline in a contract whether one, or a panel of three (3) or more, arbitrators will decide their dispute. As a general rule, the more complicated and significant an issue is, the more likely multiple arbitrators will be involved.
Parties can choose to appoint arbitrators in a number of ways, including by agreement, selecting from a list of arbitrators, or via a process of elimination.
Rules can establish timelines for resolving a dispute, including when notices are provided, how long hearings last, etc.
Rules of evidence can be complex in ordinary litigation. They are typically more relaxed in arbitrations allowing more evidence to be considered, although there can also be less time to present and discover evidence, as well.
Rules often dictate the form that an award can take, as well as any potential deadlines for decisions.
Rules may allow parties to keep and receive records of the proceedings, and/or to keep such records entirely confidential.
Arbitrations generally are intended to streamline the process and decrease the costs when compared to resolving a dispute in court. But, as noted above, arbitrations are not all run the same way. With some important exceptions, arbitration is generally thought to be more informal than litigation, and is typically intended to provide a more streamlined, time-saving, and cost-effective method for resolving potential legal disputes.
The beginning of the arbitration process involves one party giving notice to another of their intent to arbitrate a dispute, informing them of the nature and basis for the proceeding. The other party then gets a period of time to respond in writing, indicating whether they agree to resolve this dispute via arbitration. Once it is established that the disagreement will be resolved in an arbitration, the arbitration process itself begins, based on the rules and procedures selected by the parties or specified by contract.
One of the reasons that arbitration is often thought of as quicker and cheaper than litigation is that the paperwork involved in a dispute is cut down sharply when compared to litigation. The procedures for many arbitrations cut down sharply on some of the burdensome and expensive litigation tools collectively known as "discovery". The discovery process is intended to allow for exchanges of documents and evidence between parties in a dispute. However, this can often lead to costly and time-consuming disputes, with mountains of paperwork. The arbitration process usually cuts down significantly on discovery, allowing an arbitrator to take a more active role and possibly curtail excesses.
After this, the process is somewhat similar to a courtroom trial. Parties make arguments before the arbitrator(s), call witnesses, and present evidence to establish and defend their respective cases. The rules for an arbitration hearing may differ from those of a courtroom, however, and opportunities to question or cross-examine witnesses may be more limited. Once the hearing is concluded, an arbitrator or panel is given a certain amount of time in which to consider the decision and make a ruling.