Even if arbitration is perceived as a much less formal procedure as compared to regular court litigation, there are still steps to take that may vary from state to state or country to country but that must be respected.
The procedure starts with a demand of arbitration. After taking care of the appropriate arbitration fee the parties will have to choose a neutral arbitrator. Certain clauses will require that the parties go through one of the big arbitration groups such as the National Arbitration Forum or the American Arbitration Association to resolve the dispute. In that case the parties will have to choose an arbitrator between a large panel of neutral candidates who in many cases can be attorneys or retired judges. If the clause doesn’t make such requirement the parties will have the possibility to find an independent arbitrator. National arbitration agencies usually have their own set of rules concerning the arbitration: when to schedule the hearings, the resolution of the conflict, etc. If the parties decide to go to an independent arbitrator they will be able to personally decide which rules will apply and how the arbitration process will happen which requires a higher level of cooperation between the parties.
After an arbitrator is selected, a preliminary hearing will take place during which the parties can explain the conflict for the first time and decide on details such as confidentiality, for example.
Unlike a court procedure, the hearing may take place in any convenient setting as long as it’s neutral. The parties will be able to present their side of the story, bring any evidence in their favor as well as witnesses that can testify. The witnesses might also be questioned and cross-examined. In an arbitration hearing the rules of evidences and procedure are simplified compared to a traditional courtroom and the arbitrator can accept a larger range of documents. The arbitration hearing ends with a closing argument from both parties summarizing their view on the conflict as well as the evidence and trying to convince the arbitrator to rule in their favor.
Whereas traditional court litigation may take years to be resolved, arbitration can take much less time, perhaps a few months. The arbitrator will submit his decision,” the Award”, in writing. The length can vary from a simple statement (who won and how much money is due) to a longer explanation of a few pages. In both cases, the arbitrator is not required to follow the Law or any previous decisions and can rely on his own personal reasoning.
If the arbitration is binding, the parties will have a hard time appealing the decision except in the case of extraordinary circumstances such as corruption or if the arbitrator refused to postpone the hearing, for example.
If arbitration is an easier way to resolve conflict between the parties, keep in mind that you are giving up the right to appear before a court and eventually a jury, and to go through a process that might not give you as many opportunities and tools as court litigation. Also, arbitration is still more affordable than a regular trial but the fees and the costs of the procedure have been increasing. It is common to hire a lawyer to feel more confident and reassured, which can tremendously increase the cost of the procedure. Nevertheless one of the greatest advantages of arbitration is that the resolution can remain confidential whereas most court cases are public.