Business Arbitration

Business Arbitration

Business arbitration is an alternative to going to trial to resolve a business-related dispute or lawsuit.  Many business contracts specify arbitration as the final venue for resolving any dispute which arises under the contractual agreement.

Arbitration is usually much less expensive than a trial in a Court of Law.  The process is much more streamlined reducing or eliminating many of the superfluous motions and other process which lengthen the time of the proceeding and substantially increase the cost.

Arbitration is most often (but not always) binding, which means the decision of the arbitrator cannot be appealed except in the extremely rare instance of collusion or some other form of fraud on the part of the arbitrator.

Generally speaking, arbitrators are usually retired judges or highly experienced attorneys who have extensive legal background in areas of the law which are germane to the case.  The parties and their attorneys can propose one or more arbitrators and the parties ultimately agree to allow one arbitrator (or panel) to hear their case.

Arbitration usually begins with the lawyers from each side submitting a brief to the neutral arbitrator. Once the arbitrator has had the opportunity to review both points of view and all applicable governing laws, the arbitrator presides over a hearing where both sides are able to present testimony and evidence.

Business arbitration is a broader process than a court of law, and the arbitrator has more freedom to decide the case and is not restricted by California’s rules of evidence. The arbitrator can decide the case based upon a broader concept of fairness.

Discovery and the production of witnesses is usually much more limited in Arbitration.  Attorneys can carefully craft their presentations and submissions to the much more sophisticated and focused arbiter (versus a jury, for example).

How is Arbitration Different than Mediation?

Arbitration is a much different legal process than mediation. While mediation focuses on facilitation without requiring or ultimately reaching a settlement, an arbitration is designed to resolve a dispute by establishing a third party or “neutral” as a private judge (or in some cases a tribunal of 3) to hear the case and issue a judgment. The parties surrender their authority to resolve the dispute to the “arbitrator” or “tribunal” and the result of the arbitration will either be “binding” or “non-binding.” In a “binding” arbitration (the most common) the parties agree to abide by the “award” – the decision issued by the arbitrator after both sides have had the opportunity to present their case.

This is why it is so important to work with experienced attorneys at the Watkins Firm to ensure that the selection of the arbitrator is carefully managed. It is important to ensure that the candidate is expert, capable and has a fair track record and reputation for neutrality and appropriate rulings.

Arbitrations are private, and the general public is not admitted. Records are sealed and confidential. This, along with the greatly reduced timeframe and cost make arbitration an attractive alternative in many cases to business litigation.