A few years ago I posted a blog under this title regarding arbitration and I was surprised at how much feedback I received. A number of people wanted to know more about arbitration and how they might use it to help resolve business or other civil disputes. After all, it is no secret that settling disputes through the courts is a lengthy process. Generally, from a business perspective, you want to resolve your dispute one way or the other in an efficient and timely manner. You can then account for the result and move forward with your business. It is the uncertainty of the outcome of any litigation that makes putting together any business plan a challenge. Moreover, lengthy litigation can impede the ability to obtain financing, can be expensive, and can prevent you from being able to sell your business while it’s “tied up” in litigation.
Arbitration, while not available for the resolution of certain matters such as family law and probate matters, offers parties a comparatively efficient path for the resolution of most business disputes. Arbitration is an available option even if the dispute is not presently governed by a binding arbitration clause. All the parties need to do is to agree to go to binding arbitration.
Key attributes of arbitration include first and foremost the speed of resolution. While it may take a couple of months to complete the arbitrator appointment process, once appointed, arbitrators typically hold preliminary hearings and enter scheduling orders setting matters for a final hearing in under a year from the date of filing, depending of course on the magnitude of the controversy. While the court system strives to achieve such timely results, it is not typical, particularly where a matter goes all the way through trial. Another important attribute, particularly for businesses or any busy person, is that the parties work in conjunction with the arbitrator to schedule hearing dates and deadlines. Unlike the courts, if the parties agree on any particular point, the arbitrator is, for the most part, bound by that decision. The informality of arbitration also allows for telephonic attendance at most preliminary matters, which for those trying to actually get business done, in addition to resolving their disputes, is extremely helpful. Additionally, not requiring in person attendance at every hearing opens the door for numerous qualified individuals located throughout the United States and beyond to serve as the arbitrator. Such selection can allow the parties to select an arbitrator with industry specific expertise.
Arbitrators may, and frequently do, take testimony, particularly of a collateral nature, by telephone or video. This again can vastly decrease the burden of the dispute resolution process. For instance, experts, which are often expensive and located around the country, may be allowed to testify by telephone or video. This can be a significant cost saving option not generally available in the courts.
Significantly, the ruling of the arbitrator is generally (unless otherwise agreed by the parties) fully enforceable and non-appealable except on very limited grounds, usually amounting to improper conduct on the part of the arbitrator. This helps to ensure finality in the process and while you may not be able to take your dispute all the way to the Supreme Court to argue a finite point of law, you will at least have a resolution to your dispute. Unlike mediation where a mediator seeks to get the parties to agree to a resolution, an arbitrator determines the resolution much like a judge does in the court setting. I will caution you that both mediation and arbitration fall under the alternative dispute resolution (ADR) categorization and the lexicon for ADR now includes non-binding arbitration, which, for all intents and purposes, is mediation. This is an unfortunate bit of confusion added to what otherwise are two simple and straightforward concepts. Frequently, parties may elect to use the services of a mediator during the middle of an arbitration, where they feel they may be able to agree on a resolution. Agreeing to arbitration does not prevent mediation of the dispute at any time during the arbitration process.
Of course before agreeing to arbitrate any dispute or enter into any binding arbitration clause you should consult a licensed attorney to advise you on the specifics of your situation. While arbitration is usually quicker than the court process, discovery is also limited. Limiting discovery saves time and money but also may prevent you from developing a case as fully and completely as you might in the court setting. Discovery over third parties not a part to the arbitration can also be challenging and difficult to enforce. Lastly, the parties generally split the cost of arbitration up front with the possibility of those costs being reassigned in the final award. This means there is significant upfront expense that is not incurred in the court system. It is important to discuss these issues with an attorney knowledgeable in the arbitration process to advise you on whether arbitration is right for your particular situation, but I hope this posting simply encourages you to have that conversation.
The American Arbitration Association [“AAA”] administers cases in the Virgin Islands and the AAA offers more information on their website www.adr.org in their AAA University section. There is, however, no requirement that their services be used unless the parties have agreed to do so and many other options are available. Arbitration is simply worth your consideration.