1. What is arbitration?
Arbitration is the private process by which a dispute is presented to a - and decided by - a neutral arbitrator (or panel of three arbitrators) whom the parties help to select. The decision of the arbitrator (called an"award") cannot be appealed, except on grounds of fraud, misconduct by the arbitrator, or refusal to hear material evidence.
2. How long will it take to set up an arbitration?
The answer depends on how complicated the dispute is, how many parties there are, what agency (AAA, JAMS, et al.) is administering the arbitration, whether there will be one or three arbitrators, how easily (or whether) the parties agree on the arbitrator(s), and other variables. An "average" commercial dispute has the arbitrator selected within 90 days of its filing.
3. How can I get the other side to go along?
Most of the time, the parties will have signed an agreement providing for arbitration in the event of a dispute. Such agreements are fully enforceable in American courts, and a "default" award may be obtained against a party who agreed to arbitrate but refuses to participate in the process. If you do not have a pre-existing agreement to arbitrate, the same advantages that appeal to you about arbitration may well appeal to the other side: having the ability to select your own arbitrator(s); saving time and money with this streamlined process; avoiding publicity (arbitrations are private, unlike court proceedings); flexibility - the arbitration process can be designed specifically to meet the needs of the particular dispute.
4. How long do arbitrations normally take?
As with setting up the arbitration, the length of the hearing process itself depends on the nature and complexity of the dispute. Unlike many court systems, however, the parties can count on having the hearings on the scheduled dates, at the scheduled times, and at a location of their choice. Averages are meaningless, but a "garden variety" arbitration will usually be heard in two or three days. Normally, the arbitrator's award will be rendered within 30 days of the last hearing date.
5. How is this different from a court case?
The most important difference is that the parties retain much more control over the handling of their dispute. For example, the parties can select a particular arbitrator (or three). And, if all parties agree: any procedures (e.g., AAA Commercial Rules, Federal Rules of Civil Procedure, International Chamber of Commerce Rules, UNCITRAL Rules) can be used; hearings can be held at any time, in any place. The hearings are private, so the public and news media may not attend. The setting is less formal than in court. Much of the costly "discovery" process of court litigation is avoided.
6. What happens at the end of an arbitration?
The arbitrator renders a decision (called an "award"). Depending on the parties' agreement, this decision may range from a simple statement of who won and what they won, to a lengthy opinion giving all the reasons for the arbitrator's decision. In all countries who are signatories to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (known as the "New York Convention"), an arbitration award issued in another signatory country may be turned into a court judgment in another signatory country, and enforced as such.
7. If I'm from another country, will I be forced to use an American arbitrator?
Not if you are proceeding under the AAA Rules. There are many American arbitrators who are accepted as neutrals by citizens of many countries. There are also a smaller number of foreign nationals living in the U.S. who serve as arbitrators. In any international dispute, however, the American Arbitration Association, by Rule, will only appoint a neutral arbitrator who is not a national of the countries of any of the parties. In the latter situation, the AAA frequently calls upon established arbitration organizations of other countries to supplement its list of "foreign" arbitrators.
8. Can I learn the backgrounds of the arbitrators before deciding?
Certainly. The American Arbitration Association (and other responsible alternative dispute resolution providers) will provide the biographies of all prospective arbitrators to the parties before selection is made. Some parties choose to interview prospective arbitrators as well. In this instance, all parties should be represented at the interview, so that the neutrality of the prospective arbitrator will not be compromised. If necessary, references should also be made available.
9. How much will it cost?
The biggest additional cost of the arbitration process is payment for the arbitrator's time. In run-of-the-mill commercial cases, arbitrators serve for as little as $600 per day. In more complicated disputes, parties often choose a more experienced arbitrator. These arbitrators are compensated on an hourly basis, currently ranging from $250 to $650 per hour. The American Arbitration Association charges separate administrative fees which also vary with the length of the arbitration hearings, and other resources used. Other institutional providers may charge a flat hourly fee and take a percentage of the arbitrator's fee.
10. Whom do I contact to find out more?
Contact the American arbitration Association website: www.adr.org or call Michael Powell, Regional Vice-President, American Arbitration Association. His telephone number is (213) 383-6516, and his fax number is (213) 386-2251.Other services also administer arbitrations and would be glad to provide information on their services. Individual arbitrators may also be willing to provide information, but keep in mind that the arbitrators you ask may then not be able to serve on the particular case you consult with them about.
