When is arbitration not appropriate

If arbitration is appropriate for your case, your attorney can help negotiate the best type of arbitration for your case. Arbitration involves submitting information to the arbitrator to help him decide the case. Other times there is a formal presentation in person, with each side arguing their side orally, and submitting documents to support their position. In this format, witnesses are sworn to give truthful testimony and then are questioned and cross-examined by the attorneys.

The attorneys make oral arguments on behalf of their clients, just as if they were in court, but the setting is typically a law firm conference room and the atmosphere is more casual than in a courtroom.

There is no jury, no judge, and no court reporter; just the parties, their attorneys, and the arbitrator. After the submission or hearing, the arbitrator usually writes a letter to the parties giving his or her decision, often with a brief explanation.

This concludes the matter without the stress and unpredictability of presenting your case to a jury in court. There are a number of advantages and disadvantages inherent in the arbitration process.

Whether it is right for your case is a question for you and your attorney, but below are some general pros and cons to consider. The decision whether to arbitrate your case, and how best to structure the arbitration and when it should take place, and even who the arbitrator should be, can be a complex process and depends largely on the individual circumstances of a particular case. For example, if an injured claimant has moved while he was receiving medical treatment, so that his doctors are in several different states, then the cost of bringing their testimony to trial versus being able to submit their opinions in documents may make arbitration a better, more economical choice.

On the other hand, if there is harmful information in medical records that would not be admissible in court, but would be considered by an arbitrator, then a trial may be more likely to result in a favorable outcome than an arbitration.

At Allen and Allen, the attorneys are experienced in the use of alternate dispute resolution methods like arbitration, and will advise you if and when, and under what structure, arbitration is appropriate for your case.

About Scott D. The written analysis, distributed to management, includes an ADR plan and suggestions on how to strengthen the relationship with the opponent. If the case can be handled through ADR at or below the calculated risk-exposure level, the company will proceed to resolve it without litigation.

The overall aim is to resolve the contention efficiently with little expenditure of time and money. In this circumstance, few companies seriously consider negotiation. In , for example, NCR discovered that one of its suppliers had sent it computer boards that did not conform to specifications. NCR wanted to return the boards for a refund, but the vendor refused to cooperate on the grounds that NCR had not complained in a timely manner and that, in any event, the supplier could fix the defect.

NCR did not want the goods repaired, because improved technology introduced in the interval had made the items virtually obsolete. NCR offered to compromise by returning the boards and claiming only a partial refund or a credit toward future orders of other products.

The supplier declined to give a refund in any form, vowed to undertake a legal battle, and hired a large law firm. Sticking to its policy, NCR declined to enter into litigation.

Instead, it filed an arbitration demand. First he objected to arbitration, then he protested the hearing venue, then he introduced a motion for discovery. But the American Arbitration Association dealt with those roadblocks, succeeded in scheduling an arbitration session, and, several days before the hearing, the parties settled.

This case illustrates the routine though not negligible matters that arbitration handles particularly well. Here again, the prospect of arbitration quickly brought the case to its virtually predestined end, with a result almost certainly better than litigation could have achieved. This case also illustrates the benefits that can stem from the single-minded avoidance of litigation.

NCR then made settlement offers built around credits to be applied to future business. When negotiation failed, the ombud pursued arbitration. Even after the hearing date had been set, the ombud continued doggedly to pursue negotiation and finally hit pay dirt. In organizations where a preference for ADR has taken hold, fresh approaches to conflict tend to bubble up almost on their own. One example is the Toyota Reversal Arbitration Board mentioned earlier, which is a nonbinding mechanism to settle disagreements with its dealers.

In companies where a preference for ADR has taken hold, fresh approaches to conflict tend to bubble up almost on their own. The board had three distinctive features.

First, it laid down rules for the arbitration process rather than allowing the process simply to develop on its own. Second, it made arbitration decisions binding on Toyota but allowed dealers to appeal.

By underscoring the fairness of the procedure, this feature of the program has had the unexpected effect of actually increasing dealer acceptance of arbitration results. Third, it set up an open file of case histories, which has allowed Toyota and its dealers to cite relevant precedents and thus cut straight to a resolution of many disputes without laboring through the entire arbitration process.

Because most disputes are similar, dealers with very little legal expertise can work through the details and find helpful patterns. Many companies can avoid disputes by analyzing root causes and acting on that analysis—an indispensable part of the peaceful approach.

Many companies have developed arbitration not so much to hold down as to disguise both costs and unnecessary procedures. NCR has set up guidelines to deal with this problem. It has found that arbitration looks like, feels like, and works like arbitration when the parties are prepared to pursue the following goals. The parties agree to stipulate undisputed facts and matters of law and to encourage the arbitrator to rule on disputed matters of law in summary form before hearing evidence.

The arbitrator should specify which issues are most likely to generate disputes, and he or she should carefully avoid asking the parties to submit pre-hearing briefs on other issues, which is inevitably a waste of time and resources. In some cases, no briefs are needed at all. For example, when NCR is the claimant in a hearing called to collect money on an account, the company usually cites the law orally or submits a photocopy of the relevant statute to the arbitrator.

Even when briefs are appropriate—on developing matters of law, say, or where court decisions conflict—NCR has found that their greatest usefulness is in focusing attention on key issues. Arbitrators should be asked to identify the issues on which they want the parties to write briefs. NCR has even gone so far as to ask arbitrators to set page limits on briefs.

Prehearing exchanges are invaluable in smoothing the way toward a resolution. The parties trade exhibits and witness lists, and discuss which items are important to the case and which peripheral. It is very important that these exchanges not resemble the discovery process typical of litigation; they should focus instead on documents to be used in the hearing.

Prehearing exchanges often lead to a reduction in the witness lists and to having less important witnesses submit their testimony by affidavit or even by telephone. In order to restrict discussion and head off problems, NCR has drafted damage limitations into the standard ADR clause it includes in all commercial contracts. In many cases, there is or should be no legitimate argument about the amounts in dispute, which makes extensive damage proof unnecessary. Where possible, parties should stipulate the extent of damages and the arbitrator should rule on the reasonableness of damage limitations before hearing evidence.

In more complicated cases, NCR may go so far as to exact agreement on a dollar floor or ceiling or on so-called baseball arbitration to keep the amount to a reasonable level. In baseball arbitration, each party picks a figure and the arbitrator must choose one or the other. In adversarial proceedings, each side typically tries to outexpert the other; in arbitration, a limit on the use of experts saves time and money. For instance, instead of retaining opposing damage experts whose testimonies are likely to conflict, it makes good sense for both parties to agree on a single, neutral expert.

Instead of retaining opposing damage experts whose testimony conflicts, both parties should agree on a single, neutral expert. One effective use of expert testimony is to ask each party and the arbitrator to submit key questions for the expert to examine. In some areas—technology, for example—the expert can play a role in root-cause analysis by recommending improvements in products or practices. This is a much more constructive activity than merely offering a partisan opinion.

The standard ADR clause inserted into all NCR commercial contracts has many features that help ensure that arbitration will really be arbitration and not camouflaged litigation. Among them are guidelines on the qualifications of the arbitrator, empowerment of the arbitrator to grant injunctive relief, an agreement that challenges to arbitration or award decisions be governed by federal arbitration law and that the challenger must pay costs and fees if it loses , and limitations on discovery.

Boosting commitment to ADR and avoiding the trap of litigation-in-disguise are both important steps in the effort to replace confrontation with negotiation. The essential third step is to create a systematic process that mandates ADR as the first step in every legal action.

By DARP rules, every dispute is entered into a PC database within 24 hours of its inception, and everyone at NCR who needs to know is notified, from those involved in the complaint to those who may help to resolve it. Within three days, NCR notifies opposing counsel that it is addressing the problem with a view toward peaceful resolution. Then came a glitch: while the contract called on NCR to supply one repeated-use, or multipass, ribbon cassette for each printer, it turned out that no vendor could deliver a multipass ribbon to the specs of the printers designed for the project.

Several months later, some executives of the carrier raised the matter of the multipass ribbon once again. Soon the amicable relationship had deteriorated, and each meeting became a rehash of previous encounters. A healthy business relationship had gone sour over a small matter. A paralegal well versed in DARP procedure was assigned to investigate the situation and look for possible solutions including a review of alternative sources of multipass ribbons.

The ombud had the contract and some key related documents collected, analyzed, and summarized. She also interviewed several NCR employees who had played critical roles in the history of the dispute. The two sides soon reached agreement on the chronology of the project, and they stipulated a list of events and the specifics of the contract.

Knowing the major differences between arbitration and litigation can be a valuable asset and a great time and money saver. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising.

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