What is Arbitration?

There are many forms of arbitration, but when we reduce it to its simplest form, arbitration is an agreement between two (or more) parties to hire a neutral person to resolve a dispute outside of the organized court system.  Sometimes people speak of “hiring a private judge.” It is one of the many methods that are collectively referred to as alternative dispute resolution. Arbitration provides an alternative to trial in court by putting the matter before an impartial or neutral third party without the formality of court proceedings. Arbitration has historically been highly common in labor and construction disputes, but arbitration has become the go-to method for virtually every commercial business dispute, and is an increasingly common method for resolving some family law matters.

ARBITRATION SPECIFICS

Unlike litigation where the proceedings are governed by Court Rules, the parties decide on the rules for arbitration.  This may be as simple as an agreement that a matter will be resolved by written submissions without live testimony, as formal as agreeing to adopt the rules of the American Arbitration Association, or something in between. There are two types of arbitration: Binding and Non-Binding. When an arbitration decision is “binding” that means the decision is final and either party can take the decision and enforce it in court. A non-binding arbitration can be appealed to court.  A common example of non-binding arbitration in Snohomish County is taking a child support modification or personal injury claim to “Mandatory Arbitration” where an arbitrator is assigned by the court to decide the issue, but either party may ask for the court to review that decision (within certain time limits).

BENEFITS AND DISADVANTAGES OF ARBITRATION

Arbitration is promoted as an efficient way to resolve conflicting parties. A few of the benefits include:

• Avoiding lengthy litigation

• It’s typically more affordable than litigation

• Unlike organized court trials, the flexible nature of arbitration allows for convenient scheduling and simplified rules in a private setting

• Privacy in the resolution of a dispute, not in open court

While there are many positive reasons to hire an arbitrator, there are a few downsides to consider. Some potential disadvantages to arbitration are:

• There are limited resources if you disagree with the arbitrator’s final award decision. In other words, you could be stuck with the decision regardless if the award seems unfair or unjust

• Many large companies and car dealerships have “take-it-or-leave-it” arbitration clauses that are designed to work in their favor rather than the challenger’s favor who likely has less money and less power

• Due to arbitration being held in private settings rather than open courtrooms there is high lack of transparency which can lead to less objectivity and biased driven decisions