Arbitration: Five Surprising Facts You Didn’t Know

When you think of arbitration, what comes to mind? Is it an amicable way to settle disputes between two parties in a cost-effective manner? Or does it conjure up images of an informal courtroom proceeding where an arbitrator decides the outcome? In reality, arbitration can be either one, depending on the type of arbitration in which you’re participating.

Here are five facts about arbitration that may surprise you:

1) There is no set number of arbitrators in arbitration proceedings. One to three arbitrators are common, but there can be anywhere from one to ten or more in large-scale corporate and international cases.

What is arbitration?

A good place to start is by talking about what arbitration is and what it isn’t. Many people mistakenly assume that arbitration is just like a trial. In actuality, though, they couldn’t be more different.

For example, only one party can bring a lawsuit in court while both parties can bring claims before an arbitrator. Arbitrators also have far less discretion to craft solutions that are fair to both sides than judges do.

Why use arbitration?

Arbitration is a way to settle disputes by having an arbitrator make a binding decision. Arbitrators are neutral and well-trained in their field. When it comes to legal issues, you can use arbitration instead of going to court.

For example, if your car was damaged in a parking lot dispute, you can use arbitration rather than suing someone in court. An arbitrator will mediate between you and your opponent until both parties come to an agreement on how much should be paid for damages.

Who is covered by arbitration agreements?

While you might expect arbitration agreements to be limited to big businesses and corporations, that’s not necessarily true. In fact, most of us will encounter an arbitration agreement at some point in our lives — whether we know it or not.

What happens if there’s a dispute?

If you’re wondering about what happens if there is a dispute, rest assured that arbitration hearings are just like court hearings. There will be testimony, witnesses, and evidence. You also have a right to legal representation at an arbitration hearing – as with most things, it pays to get help from someone who knows what they’re doing.

How do you get out of an arbitration agreement?

There are two basic ways to get out of an arbitration agreement. First, you can opt-out of it. Second, you can challenge its existence under a state statute like Florida’s contract law or Washington’s public policy.

With either approach, whether successful or not, your chances are likely better going to court than staying in arbitration — and it will be much easier on your wallet. Click here for a full list of states with opt-out laws.