Is Arbitration Really Faster?
Because arbitration is often touted as a cheaper and quicker resolution when compared to litigation, curious minds may wonder how long arbitration takes. While many proponents of arbitration state that it often moves more quickly than litigation, critics state that many times, it can just as long as litigation. While this may certainly be the case, it is clear from this comparison that there are a variety of factors that influence the time of arbitration, and no two arbitrations will be exactly the same. This means that the length of arbitration can vary greatly, and there is no one answer to how long arbitration takes. Because every arbitration is different, this article will examine the arbitration process through the lens of determining where in the process the parties may expect to spend more time, and places that may be sped up through preparation and agreement of the parties. The goal of this article is to help readers determine whether arbitration is a valuable option for their dispute by having an accurate understanding of the time it may take and any influence they may have throughout the arbitration.
An Introduction to Arbitration:
Arbitration is an alternative dispute resolution mechanism that has exploded in popularity around the globe in the last few decades. Instead of presenting evidence in front of a judge or jury and having them decide the case, the parties will present their case to an arbitrator or a panel of arbitrators who decide the case. While this may not seem much different from litigation, several key differences have impacted the popularity of arbitration. Arbitration allows the parties to keep the dispute confidential and allows the parties to have a final resolution without getting tied up in years of appeals. Arbitration is also voluntary, which means that the parties have to both opt into arbitration at some point, which makes it impossible for one party to force the other into arbitration.
Arbitrators are neutral third parties that are appointed by the parties or the organization under which the parties have agreed to arbitrate. Arbitrators are obligated to disclose any potential conflicts that may arise between their own lives and the position of either of the parties, as well as stop arbitration if an issue comes up that may call their independence into question. Additionally, they must act neutrally while conducting the arbitration, and one-sided actions may be caused by to overturn of the award. Many arbitrators will draw upon years of experience and expertise in the field to aid in their decisions and help the process move along efficiently. The style, method, and needs of the arbitrator will often impact the time of the arbitration, which will be discussed below.
Examining the Timing of the Arbitration Process:
Because each arbitration will have different issues and complexities, the length of time it takes to arbitrate will vary with the different factors. With the variation, it can be difficult to predict how long an arbitration will take and whether the arbitration will resolve faster than litigation. However, a thorough understanding of the process of arbitration and an examination of the different factors at each step that may speed up or slow down the arbitration will help create an estimate for the time an arbitration will take. The arbitration will often move through 7 or so steps—agreement, initiation, arbitrator selection, initial hearing, discovery, hearing, and award. Any of these steps can have an impact on the time an arbitration takes, so if time is a goal in arbitration, it is important to understand the issues that may arise in each step.
Before the actual arbitration can begin, the parties will need to agree to arbitrate. This can happen in two ways: pre-dispute or post-dispute. Pre-dispute agreements are often contained in a contract between the parties that requires that all disputes that arise under the contract will be submitted to arbitration. This is often called an arbitration clause. A post-dispute agreement is an agreement between the parties where they agree to submit the specific dispute to arbitration. In either case, the parties must agree to arbitration to initiate the process. This can cause the time of arbitration to slow if one party is reluctant to agree, but a pre-dispute arbitration clause will always make the process go quickly once a dispute arises because the parties are bound by their agreement to arbitrate. Occasionally, a party may challenge the applicability of the arbitration clause, but courts will usually uphold an agreement to arbitrate unless it was clearly not agreed to fairly. This challenge may slow the beginning of the process, but it is rare when the parties have a written agreement to arbitrate.
Once a dispute arises and the parties have established that they have an agreement to arbitrate, they will need to initiate the arbitration process. Each arbitration provider has a different requirement for the initiation of the case, but they will generally require that the person asking for arbitration submits a request or demand for arbitration to the governing provider. Several pleadings will need to be submitted to start the process. These are:
- Demand: A demand for arbitration is a formal request to both the organization that handles the arbitration under the agreement and the other party. This request will begin the process and start any timelines that need to be met. IT can be served in conjunction with the statement of the claim, or it may be independent.
- Statement of the Claim: The party that is requesting the arbitration will also submit a statement of the claim. This statement will include the harm that occurred, the person or entity that harmed them, and what relief is requested. This is usually submitted with the demand for arbitration and served on the opposing party.
- Answer: Once the other party receives the statement of the claim and the demand for arbitration, they have the chance to answer. An answer is a response to the statement of the claim. It will list any defenses to the claim and any counterclaims against the initiating party.
Many organizations have timelines for when certain documents need to be submitted, so it is often little one party can do to make this move quickly. What may draw out the process is the responding party using the full time to submit their answer and begin the process of arbitration.
Once arbitration has begun, the parties will need to have an arbitrator appointed. There are several ways to choose an arbitrator, each with its own set of issues concerning time. The method for arbitrator selection will usually be in the agreement, so this will need to be considered when drafting the agreement to ensure the fastest process. An arbitrator may be appointed in any of the following ways.
- By the Parties: Many parties, especially when they are individuals or small businesses, will choose to find an arbitrator themselves. This can be through organizations or searches online. Both parties will need to agree on the arbitrator, so this can take time if the parties are struggling to find an arbitrator that is agreeable for both parties.
- By an Organization: The parties may also choose to have an organization appoint the arbitrator. This can be under the organization’s armor by simply asking for the organization’s input. The parties will need to submit a request that will often outline any experience or expertise that is needed, and the organization will appoint the arbitrator. This can move quickly as long as the parties have a plan for what they need from an arbitrator.
- By a Combination: In some cases, the appointment of the arbitrator will be done through a combination of the processes listed above. The parties will submit a request to an organization, which will send a list of possible arbitrators that the parties then choose an arbitrator from. This can often be a quick process because it allows the parties to choose, yet limits their choices to a reasonable number.
Choosing the right arbitrator can impact the rest of the arbitration, so it is often wise to spend more time in the appointment process if speed overall is important
In more complex or formal cases, the parties may choose to have an initial hearing. Here the parties will outline the dispute, familiarize themselves with the process, the arbitrator, and each other, and discuss deadlines for discovery or other issues that need to be discussed. This may be relatively quick, but if there are large discovery issues or any interim relief that may need to be discussed, this can be a long process. Additionally, timelines imposed in this session may extend the overall process. While these are typically necessary for complex issues and arbitration, they may be skipped in more straightforward disputes if time is strained.
Discovery is the process of exchanging information between parties. There will often be discussions about what needs to be exchanged and when it needs to be exchanged. For complex issues, this process may take a long time as the parties are gathering evidence and exchanging it. However, the evidentiary rules are laxer in arbitration than in litigation, so discovery may move quickly if the parties are prepared and can get the information they need into evidence. If there are disagreements with how information is exchanged, this process may take longer than planned. The complexity of the case and the timelines set by the arbitrator will often be the strongest impact on the length of time needed in this phase.
Once the discovery process has wrapped up, the parties will participate in a hearing. This is the place where the parties will present their case and the arbitrator will hear the evidence to decide. The party that requested the arbitration will often present first, giving the arbitrator any evidence, they have to support their claim. After this, the responding party will present their case and defenses. This process is usually highly dependent on the complexity of the case and the preparation of the parties. If the dispute is simple and the parties are prepared, it will probably go quickly and could be as short as a day or less. However, in complicated cases or when the parties are not fully prepared, the process may last days or weeks. However, because of the lax evidentiary rules, there may be fewer arguments about evidence submissions and it will likely be shorter than a trial on the same issue.
The final step in the arbitration process is the award. This is the decision of the arbitrator that dictates how the dispute will be resolved. The timing of this is highly dependent on the arbitrator and the timelines in place; however, if there is time pressure, the parties could agree to ask the arbitrator for speed and to shorten any requirements. Once the award is issued, the arbitration will be complete, as most arbitrations leave little room for appeal unless there was arbitrator misconduct or other issues with neutrality. This makes the overall process guaranteed to be significantly shorter because any trial will likely have the possibility of appeal, which can extend the timeline of litigation way past that of arbitration.
Arbitration is a valuable resource for resolving difficult disputes. While it usually moves quickly and faster than litigation, there are often other ways that the parties could resolve their dispute in a faster manner. However, arbitration’s strengths, such as confidentiality, voluntariness, and finality often draw parties to the mechanism and can help parties feel better about the time the process takes. Additionally, if the parties are prepared and have done their research, they can help the process move efficiently and ensure the dispute is resolved effectively.
- Can You Back Out of a Settlement Agreement? Legal Advice - April 22, 2022
- Objecting to Form - April 11, 2022
- Legal Representation: Why Should I Hire an Attorney? - April 8, 2022