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What Is Arbitration?

Arbitration is a form of legal conflict resolution. It is a dispute resolution alternative similar to mediation or conciliation. However, a mediator or conciliator can only recommend resolutions to a conflict, but their suggestions are not binding. Unlike these processes, the parties involved in arbitration must abide by the ruling of the arbiter.

Arbitration must be entered into willingly by both parties. Many commercial contracts will include provisions for resolving disputes through arbitration, providing an easier path than commercial litigation. Parties can agree to arbitration as a means of resolving potential disputes or after a dispute has already arisen.

The Pre-Arbitration Process

Many factors of the arbitration process are decided between the two parties entering into an arbitration agreement. The process of making these decisions and the available options are largely the same whether entering into an arbitration agreement at the time of signing a contract or after a dispute has arisen.

Decisions About the Arbitration Process

Some of the things the two parties will have to make decisions on include:

  • Where will arbitration take place?
  • Where will the legal seat of the arbitration be?
  • How many people will make up the arbitration tribunal?
  • How will arbitrators be selected?
  • What rules will be used during the arbitration process?

When deciding the arbitration rules, you can either choose to follow the guidelines of an arbitration institution or set out the rules individually, selecting regulations that work for both parties.

Beginning Arbitration

The specific rules for beginning arbitration will be laid out in your contract if you set up a means for conflict resolution when you enter into a business arrangement with another party. If you are requesting arbitration from a party with whom you do not have an arbitration agreement in place, you will send them a document known as a “request for arbitration.”

This request will include a description of the issue being disputed. Additional information that might be contained in the request includes a nominee to serve as an arbitrator and any other specifics required by a particular arbitration institution if following their set rules for arbitration.

Setting Up the Tribunal and Laying the Groundwork

After the other party responds to the request for arbitration, steps will need to be taken before arbitration can begin. The arbitration tribunal must be set up.

When using a single arbitrator, the rules of the arbitration institute that are being used will typically lay out how the arbitrator will be selected. When using three arbitrators, each party will usually nominate a single arbitrator. Then, the two nominated arbitrators will choose a third arbitrator to act as the chair.

After the tribunal has been selected, determinations must be made about the issues that will be decided during the arbitration. The particulars of the timetable and process for arbitration must also be finalized between the two parties and the tribunal.

The Arbitration Process

Once everything has been set up, the arbitration will begin, following the procedure agreed upon by the two parties. This process will likely include the submission of written statements from both parties, including witness testimonies and reports from experts.

Both parties will also likely submit a number of documents, including evidence that their cases rely upon, as well as documents requested by the other party. These documents will be reviewed by both the tribunal and the opposing party.

An experienced attorney can help guide you through this process to ensure you receive the documents you require while avoiding sharing any information you are not required to exchange.

The arbitration then proceeds much like a courtroom trial, with the legal counsel from both parties making their respective arguments in front of the tribunal. Lawyers will also question witnesses and experts about the case. The length of these hearings can vary drastically depending on the particulars of the dispute.

After the Hearing

Once the hearing is complete, the tribunal will make its decision. This decision will lay out the rights and responsibilities of the two parties and will stand as the final say in the matter unless one of the parties appeals the ruling.

The grounds on which a party can appeal a decision depend on many factors, including where the arbitration took place and the terms of the arbitration agreement. If a party does appeal the ruling of the tribunal, the case will be taken to court, where the appealing party will request the decision of the tribunal be set aside or sent back to the tribunal to correct their ruling.

It is rare that an appeal can be made based on the tribunal’s finding of fact. Instead, appeals tend to focus on whether the tribunal conducted itself properly, answered the right questions, or made an error regarding the proper use of the law. The rules of arbitration appeals are outlined in Tex. Civ. Prac. & Rem. Code § 171.098.

Decide if Arbitration Is Right for You

Arbitration can be a great method for avoiding a lawsuit and settling a dispute in a quicker and cheaper manner. However, arbitration might not be the best option in all cases. When considering arbitration as a means of conflict resolution, it is essential to understand whether or not this is the best option for your situation.

An experienced attorney can help you choose the best option when it comes to resolving a dispute. We can provide a free case evaluation to guide you on the right path when you contact us at the Buzbee Law Firm for more information.