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Why Arbitration Matters
Arbitration has become one of the most common alternatives to traditional litigation. Businesses and individuals alike turn to arbitration because it can be faster, more cost-effective, and confidential compared to court battles. In arbitration, parties have more control over who decides their disputes, as arbitrators are often subject-matter experts. If handled correctly, arbitration can achieve outcomes comparable to litigation without the burden of years of court proceedings.
Laying the Groundwork
The arbitration clause in a contract will serve as the foundation for any dispute that may arise. This clause should lay out how disputes will be handled, including the number of arbitrators, the forum, and the rules applied. Poorly drafted arbitration clauses can turn into procedural nightmares. A clause that is too vague may leave parties fighting over process before even reaching the merits of the dispute. This can add costs and delay, defeating the purpose of arbitration in the first place.
The American Arbitration Association (AAA) provides rules for disputes across multiple case types including commercial, construction, consumer, and employment. Parties often underestimate how significant these procedural differences can be and so it is critical to understand under which framework the arbitration will operate.
Arbitrator Disclosures and Objections
Impartiality is one of the cornerstones of arbitration. Disclosure obligations protect both fairness and the perception of fairness throughout the process. Arbitrators are required to disclose any potential conflicts, and parties must act quickly if they wish to object. Even minor conflicts should be addressed early to prevent challenges later. Transparency is paramount as the failure to disclose conflicts can have serious consequences, including having the award vacated.
Discovery in Arbitration
Discovery in arbitration is designed to be more efficient than in litigation. Instead of endless interrogatories and dozens of depositions, discovery is typically limited to what is strictly necessary.
Still, discovery disputes are common. Arbitrators balance the need for evidence with the goal of efficiency. Motions practice is usually narrower; requests to compel production, limit depositions, or exclude evidence must be carefully considered. Unlike litigation, where motion practice can drag on for months, arbitrators are often quick to decide and move things forward. Parties who overuse discovery risk both higher costs and frustrating the arbitrator.
Evidence and Hearings
When it comes to hearings, arbitration resembles litigation but with important differences. Arbitrators often admit evidence that courts would exclude.
As Leslie Berkoff of Moritt Hock & Hamroff, explains: “Things that might not otherwise come in will generally come in, and then I may decide what weight I give it.” This looser approach allows arbitrators to focus on substance rather than the technical rules of admissibility.
Arbitration hearings are also more flexible. They may use tools like the ‘chess clock,’ where each side is given a fixed amount of time to present its case, forcing attorneys to prioritize. Arbitrators themselves often ask direct questions, cutting through procedural posturing. In some cases, parties may even waive oral hearings altogether and rely solely on written submissions. These features make arbitration particularly attractive for time-sensitive disputes.
Timing, Postponements, and Fees
One of arbitration’s selling points is speed. Unlike court dockets, which can drag on for years, arbitrations are expected to conclude within months. Yet, postponements do happen, and arbitrators may allow them if there is good cause.
However, postponements can have financial consequences. Arbitrators may charge postponement fees or rescheduling costs. For businesses, this means careful planning is crucial; rescheduling at the last minute can be costly both financially and strategically.
Settlement Opportunities
Another attractive feature of arbitration is the ability to settle at almost any stage. Settlement discussions can take place before, during, or even after hearings. Arbitrators themselves do not act as mediators, and parties may independently pursue settlements at any time, notes Byeongsook Seo of Snell & Wilmer. This flexibility allows for creative problem-solving and ensures that arbitration does not lock parties into rigid outcomes. Once a ‘consent award’ is formalized by the arbitrator, however, the settlement is enforceable in court.
Post-Hearing Submissions and Awards
After the hearing, arbitrators may request post-hearing briefs, findings of fact, or responses to specific issues raised during testimony. Once the hearing is formally closed, the clock starts ticking; arbitrators typically must issue awards within a defined period. Sometimes, hearings may be reopened if new evidence surfaces.
Arbitration awards vary in form. Some are simple, while others are reasoned and detailed. The choice can depend on the agreement or applicable rules. Jeffrey Zaino of the American Arbitration Association emphasizes the importance of clarity here, cautioning that without clear rules, parties may end up fighting over the level of detail required in the award itself.
Conclusion
Arbitration, while efficient, requires thoughtful planning. This begins with drafting strong arbitration clauses that avoid ambiguity and extends through every stage of the process, from selecting the right arbitrator to managing discovery in a way that balances fairness with efficiency. Transparency and flexibility are equally critical; disclosures about potential conflicts and openness about expectations create trust in the process and prevent costly disputes later. Those who approach arbitration with these considerations in mind will be best positioned to reap its benefits.
