In arbitration, a neutral third party – called an arbitrator – is legally qualified and chosen to act as a judge to make a binding decision, and thereby settle a dispute between two parties. Arbitrators have specialized knowledge in a particular field and are usually attorneys, business professionals, or retired judges.
According to the U.S. District Court System, you may find yourself with an arbitration case if the dispute has any of the following characteristics:
- Damages do not exceed $150,000
- You have a signed a contract that includes an arbitration clause
- You want to avoid the possibility of a future lawsuit
Why do people prefer arbitration agreements?
Many people prefer to go to arbitration rather than a court case for different reasons. Some are:
- It is consensual, meaning both parties must agree to the arbitration, or an agreement had to have been signed within a contract, for arbitration to take place.
- Both parties choose the arbitrator by discussing options together, and agreeing on one. The parties may also choose to have a three-member arbitral committee, in which each party appoints an arbitrator, then those two persons agree on one arbitrator.
- It is neutral, meaning the parties are able to choose other important elements within the arbitration; including the applicable law, language, and venue.
- It is confidential. The law specifically protects the confidentiality of the existence of the arbitration, any disclosures made during that procedure, and the award.
- Its outcome is final and easy to enforce, meaning the parties agree to carry out the decision with no delay
Benefits of Arbitration
Based on the characteristics and subtleness of arbitration, compared to a lawsuit, the benefits can include parties saving a lot of time and money. The process is fair, with neutral assessments of the case being made by an arbitrator chosen by the parties. An absolute right to a full trial is also preserved, and the arbitration award can provide a useful starting point for possible settlement agreements.
If you would like to know more about arbitrations, or think you may have an arbitration case, call us at (646) 687-7587 or fill out a form here.
