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February 5, 2022

What is Arbitration?

There are several methods when it comes to alternative dispute resolution and negotiation. While mediation is a very common process for conflict resolution, arbitration could be considered to resolve issues between parties as well.

Arbitration is a binding, adjudicatory process that can be used to settle disputes and resolve issues amongst two parties in private.

This article will explain what arbitration is, the typical process of arbitration, and when you might choose arbitration instead of litigation, mediation or other legal processes to resolve cases.

What is Arbitration?

Arbitration is a private dispute resolution process in which two parties agree to submit their dispute to one or more arbitrators for a binding decision. The agreement to arbitrate is typically found in a written contract agreed to by both parties. Parties will agree to submit their dispute to arbitrators from member organizations in the American Arbitration Association (AAA). This process remains a voluntary legal procedure and separate from the court system. The Federal Arbitration Act, coupled with the case’s state arbitration law, generally governs this private dispute resolution process.

In this form of alternative dispute resolution, no single party directs an outcome. However, the complaining party will send the opposing party a notice of their intent to arbitrate a dispute, outlining the basis for the dispute per the rules of the contract. Arbitration mimics a courtroom trial minus the timeline and attorney involvement – evidence can be presented, arguments are made, witnesses can be called and questioned. The arbitrator or panel of arbitrators will then deliver a final ruling to both parties that is legally binding.

Choosing Arbitration for a Case

When choosing arbitration for your dispute, you want to be sure this is the best option for your dispute. ​​If possible, the involved parties often select arbitrators on the basis of substantive expertise. Arbitration can be done without lawyer representation but parties are welcome to have an attorney that specializes in the arbitration process.

Arbitration is a viable option to non-criminal cases, and non-violent criminal cases, including the following:

  • Divorce
  • Family
  • Child Custody
  • Property
  • Verbal or Sexual Harassment
  • Business

Arbitration is a popular way of resolving disputes and conflict between two parties to prevent litigating in a courthouse. The arbitration process is simply faster than going to court, it’s private, and the involved parties may be able to choose the arbitrators they want to hear their case rather than being randomly assigned a mediator.

Take a look at the differences between arbitration and other legal procedures to help determine the best method to resolve your dispute.

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Arbitration vs. Mediation

In arbitration, the resolution and settlement is binding in a court of law. In mediation, the resolution reached is not binding in a court of law unless finalized in an agreement by both parties. Mediation can be completed by any 3rd party (such as a therapist, counselor, lawyers, formal mediators, etc) and is usually recommended for civil disputes. Arbitration is executed by a formal, licensed arbitrator or panel of arbitrators and often used for commercial or business disputes, sometimes mandatory as an obligation of a contract, as opposed to going into litigation. Agreements reached in arbitration are completely private while agreements reached in mediation are available for public record.

Arbitration vs. Conciliation

Arbitration is often used for commercial or business disputes, sometimes mandatory as an obligation of a contract, and binding in the court of law. Conciliation is basically a highly skilled negotiation where the ADR professional works to understand the requirements between the two parties involved to see which of the requirements can be met for an immediate resolution. Conciliation is often used in labor disputes, like between a company and unions, and can be executed by a mediator.

Arbitration vs. Litigation

Arbitration is a private alternative dispute resolution method completed by a formal arbitrator or a panel of arbitrators and is binding in the court of law, similar to litigation. The litigation process requires a lawyer where parties can choose to litigate civil or commercial disputes; however they are higher in cost than arbitration and strictly completed in the courts – taking longer to reach an agreement. The judgements are made by a judge, not an ADR professional, and binding in the court of law.

Arbitration vs. Negotiation

Arbitration is a very formal alternative dispute resolution method not particularly comparative to negotiation like mediation is. Arbitration is more similar to a court process than negotiation because a formal arbitrator or panel of arbitrators makes the final decision and it is binding in the court of law. Negotiation is mostly recommended for very simple disputes, disagreements, or as a matter of compromise.

Arbitration vs. Adjudication

Adjudication is when the courts refer a dispute to be resolved outside of the courts through arbitration. These disputes don’t have to initially go through litigation before being referred to arbitration, but if this is the judgment, it’s considered adjudication.

The Fourth Party App and Arbitration Services

Busy alternative dispute resolution professionals in mediation need to maximize their time, money, and client relationships with smart, useful features. That’s where we come in. Fourth Party is the best app for mediators and arbitrators to execute safe and secure conflict resolution. When ADR professionals are on-the-move, they can find ease in our dynamic note-taking tool during in-person and virtual hearings. Also, close your cases with confidence when you try our post-reporting feature that helps you navigate compliance at the state and federal level.

The Fourth Party app is intuitive, designed to help ADR professionals like mediators and arbitrators manage tasks, streamline negotiations, and track results – all in one place.

Click here to book a demo with us at Fourth Party. We look forward to getting to know you and doing our part to improve the dispute resolution process.