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By Kathleen J. Smith

Arbitration is Alternative Dispute Resolution, “ADR”. It is similar to Mediation, except Arbitration results in an award imposed by a neutral decider, whereas Mediation results in an agreed-to settlement often designed by the neutral but thoroughly adopted by the disputing parties. Both ADR methods work because they are based on agreement of the disputants: Arbitration starts because the parties made an agreement to be bound by the decision of the arbitrator after many hours or days of hearing; Mediation ends because the parties agree to be bound by their settlement after many hours of negotiations.

Arbitration is conducted in an informal conference room, often by a retired judge. Witnesses and exhibits are used just like in court, but all the rules of motion practice and evidence are relaxed to make arbitration a more informal process. The hearing itself can seem like an executive board meeting, with the arbitrator as the CEO. The agenda is set by the plaintiff—“Claimant” and defendant—“Respondent”. Each side submits their witness list and exhibit notebooks to the arbitrator, along with an arbitration brief explaining their story and why they should win.

You may find yourself going to arbitration even if you start out in court. If there is a statute requiring that you arbitrate your dispute, you will be ordered to arbitration. If you have agreed to an arbitration clause–often found in consumer purchase contracts and employee handbooks—you will probably be ordered to arbitrate your dispute.

Arbitration saves money. Even though the parties will pay the arbitrator to hear and decide their case, and the judge in court is not paid by the litigants, the parties usually spend less on attorney’s fees because the informality of arbitration means the lawyers don’t spend as much time adhering to legalities and red tape. 

Typically, both sides have to share equally in the cost of arbitration. But employment arbitration must usually be paid for entirely by the employer. Even if your dispute is based on a contract that allows the prevailing party to recover attorney’s fees and costs, you will not be reimbursed for the costs paid to the arbitrator unless your arbitration agreement includes a term to pay the other side’s arbitration fees. 

The arbitrator’s award is usually final. You will not be allowed to appeal. You can go to court and ask to have the arbitrator’s award vacated, but the grounds for doing so are strictly limited. So there are two big protections you give up when you agree to arbitrate a dispute: there is no jury of your peers, and there is no appeal. However, if your arbitration is handled by competent legal counsel, you can expect a swift resolution that you may find just as fair as the courtroom litigation experience.

To find out which dispute resolution method is right for you or your business, please feel free to contact the knowledgeable attorneys at Schneiders & Associates, LLP. We will be pleased to review your case, answer any questions you may have, and make sure you are comfortable with our law firm. For more information please call or email our Oxnard office.

About the Author
Theodore J. Schneider practices in the areas of business and corporate transactions, employment law counseling, municipal and public law, real estate and land use, and homeowner associations. Ted began his legal career in 2002 when he joined the Los Angeles office of Gibson, Dunn & Crutcher, L.L.P. before relocating to Ventura County to join his father in practice.