The Arbitration Process
The difference between mediation and arbitration is significant. First off, an arbitrator must be agreed on by both parties—arbitrators are usually retired judges or attorneys that have no interest in the case and can be partial.
Once the arbitration process is requested and an arbitrator has been chosen, it usually takes approximately 3 months until the actual arbitration. First, attorneys from both sides gather pertinent documents to make their case and even depose witnesses and the disputing parties.
Depositions and document and exhibit gathering can be expensive, but it is less than a legal court battle. Each attorney works with their clients to gather the data and create an exhibit book.
Each party submits their exhibit book along with a summary of their case to the arbitrator at least 3 days prior to the arbitration process.
Unlike mediation, where the opposing parties are in different rooms and the mediator goes back and forth, with arbitration, both parties are present with their attorney and the arbitrator in the same room. Any outside witnesses are kept outside the arbitration until they are called to testify.
Also unlike mediation, the opposing parties leave it up to their attorneys to make their case and question all persons in the room who are in dispute. They may also use rebuttal testimony and the only exhibits the arbitrator will allow are the ones offered in advance in the exhibit books. Any new evidence that either party or their attorneys feel is prudent to the case will be disallowed by the arbitrator.
For this reason alone, it’s imperative that if you become involved in the arbitration process that you include all the exhibits you can, even if you think they aren’t pertinent.
After all testimony is heard, both attorneys are allowed to make closing statements and the arbitrator will make a written (and binding) decision on the dispute within 7 to 10 days. The decision is binding on both parties and delivered to the attorneys of each.
In the case of the bookstore, say the arbitrator thought that the buyer should have been more prudent in completing an actual inventory of the books and the overdue receivables; the arbitrator may rule here that because the buyer wasn’t diligent in their efforts to find out everything about the business, that they must indeed pay the entire amount agreed upon on the buy/sell.
Image Credit (WordSellInc)