What Does an Arbitrator Do?

What Does an Arbitrator Do?

What does an arbitrator do? Disputes that find themselves in court are very public and often messy for the parties to deal with.  However, not every dispute can be resolved through mediation or other collaborative means. This could leave a portion of disputes without a resolution, but an arbitrator may be the answer to those that find themselves in the gap between litigation and mediation.  Using an arbitrator provides the structure and decision-making of litigation and gives the parties an informal, confidential, and more collaborative experience similar to mediation.  When encountering a situation like this, arbitration may be a great option.  Hiring an arbitrator to guide you through the process can be the first step to resolving that “unresolvable” problem.  This article will outline the role of an arbitrator and how they assist parties looking for a new way to solve their dispute.

The Role of an Arbitrator:

An arbitrator is a neutral party that hears the evidence in an arbitration proceeding and issues a decision, called an award, based on how they interpreted the evidence.  Their role is similar to a judge or judicial panel in a bench trial, but they are less formal and can consider options that combine the outcomes both parties desire.  Several key characteristics help outline the arbitrator’s role.  These include:

  • Neutral: The biggest requirement of the arbitrator is that they are neutral when hearing and deciding the case.  This means that they cannot bring in their implicit or explicit biases or personal feelings about a resolution to the case.  They must remain impartial and treat each side with fairness.
  • Independent: Similar to neutrality, the arbitrator must also be independent.  This means that they cannot stand to benefit from the outcome of the arbitration, either professionally or personally.
  • Decisionmaker: The arbitrator is the one who decides the case in arbitration.  This means that they can hear the evidence and decide which party has proven their case.  However, unlike a judge, they are not required to decide solely for one party but are allowed to find ideas and resolutions in the middle.

Based on these characteristics, it is easy to see that the role of an arbitrator is to act neutrally and independently while they receive, evaluate, and interpret evidence and relevant law to determine a resolution.

Brief Overview of the Arbitration Process:

The arbitration process is more formal than mediation, so there is a more standard procedure when a dispute enters arbitration.  It will most often follow these steps:

  1. Agreement: The first step in the process is that the parties have to agree to submit their dispute to arbitration.  Arbitration cannot be forced.  This agreement may relate to the specific dispute between the parties, or it may be contained in a larger contract that submits all disputes from it to arbitration.
  2. Appointment of Arbitrators: After the parties have agreed to arbitrate they will need to appoint arbitrators.  Some arbitration agreements may require that arbitrators be appointed through a specific list of arbitrators or an organization, where they will ask the organization to appoint an arbitrator.  Other parties may choose to appoint their own based on knowledge, skill, or experience with the arbitrator.  Some complex disputes will require choosing three arbitrators, known as the panel, to decide the dispute.  When this is the case, each party will usually appoint one arbitrator and then decide on the third together.
  3. Preliminary Hearing: In some complex cases, the arbitrator may choose to hold a preliminary hearing where the parties meet and iron out specific details.  If scheduled, the parties will often exchange pleadings or evidence at this stage.  In less formal arbitrations, the arbitrator may reach out to the parties individually and ask them to submit their written statements and evidence.
  4. Hearing: After the evidence has been exchanged, a hearing will be scheduled.  This is a hearing that is similar to a court trial.  The parties will outline their points of view and ask the arbitrator to rule in their favor.  Some arbitrators may ask the parties to submit requests for relief that are more equitable than one-sided.
  5. Award: The final stage is the award, which outlines the decision of the arbitrator or panel.  This will be sent to the parties and will be binding if the parties agreed to binding arbitration.  This can be registered and enforced similarly to a judgment in a court case.

This process may change depending on the needs of the parties, but this outline can be helpful to determine if arbitration is right for a specific dispute.

Bad Arbitrators:

One of the major downsides to arbitration is the chance that the parties end up with a bad arbitrator who creates a binding decision that is incorrect or impartial.  Because of this disadvantage, courts have carved out specific instances for dealing with bad arbitrators.  This means that an arbitrator can be removed if they do not disclose and secure a waiver of any material impartiality or dependency.  An award issued may be overturned if the aggrieved party or parties can prove that the arbitrator acted impartially or biased in a way that affected the outcome of the case, that they failed to disclose a fact that would have changed the decision to appoint them, and impacted the case, or interpreted a law so poorly that it produced a materially inequitable result.  All of these issues can cause to remove of a bad arbitrator, but vetting arbitrators from the start and using solid organizations for recommendations is often the best option.

Benefits of Using Arbitration:

There are several key benefits that one may be able to unlock by using arbitration and an arbitrator to resolve a dispute.  These include:

  • Confidentiality: Arbitration decisions are confidential, while most court cases are not.  This can be beneficial for parties who are looking to resolve a dispute without letting all of their issues be in the public eye.
  • Expertise: Because the parties can choose their arbitrators, they can choose arbitrators with more expertise or skill in a given area.  This allows them to avoid having to educate the decisionmaker on the law and the technical issues that are present in the dispute, which saves time and money.
  • Finality: An arbitration award is very difficult to overturn.  This means that there is very little room for an appeal or any changes once it is decided unless the parties agree to a different result.  This can be intimidating, but it can be helpful to know that it will be finalized when the award is entered.
  • Speed: Compared to litigation, arbitration is often much faster because the parties can avoid backlogged court calendars.  Once an arbitrator is appointed, the pre-hearing and hearing can be scheduled relatively quickly.  This also ends up saving the parties money in the long run.
  • Informality: While compared to mediation arbitration is formal, it is much less formal than litigation.  Many times, the arbitrators do not apply the same rules of evidence or require the same amount of decorum that courtrooms will use.
  • Cooperation: Arbitration will often include a discussion of the possible resolutions that the parties have identified and some arbitrators may allow the parties to participate in shaping the resolution.  This can lead to less hostility than litigation, but still allows more guidance and structure than mediation.
  • Equity: As previously mentioned, an arbitrator does not need to issue an award that decides only for one side, unlike litigation.  This allows flexibility in arbitration that is not present in litigation, yet it is guaranteed to produce a final result.

Arbitration provides many benefits that other forms of dispute resolution cannot, which makes it an excellent choice for navigating difficult disputes.

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