Arbitration is the resolution of disputes by submitting them to an Arbitrator rather than a judge or jury. The advantages of arbitration include:
- the chance to have the matter heard by an Arbitrator who may be more qualified than the judge or jury in the particular field being arbitrated;
- the ability to schedule the arbitration more quickly than is typical through the court system;
- the increased certainty of actually arbitrating on the date agreed upon (cases in court are frequently postponed because Judges schedule approximately 4 trials on each day); and
- the assurance that the matter will be resolved on the arbitration date (if the arbitration is “binding”), i.e., there is no possibility of appeal.
As one of the more experienced members of the Oregon State Bar, I serve as the Arbitrator more often than I appear before them. I believe this gives me additional perspective when I need to advise clients on whether to accept a settlement offer or proceed to Arbitration, and when I present a case to an Arbitrator.
Currently there are three types of Arbitrations typically used in Central Oregon:
Circuit Court Mandated Arbitration. Local Circuit Court rules mandate that any case involving only money and not more $50,000, be referred to Arbitration. Referral is typically made as soon as the parties appear. The Arbitration is before a lawyer with more than 5 years’ experience that the parties select or is nominated by the Court, and is typically set for an Arbitration hearing within 49 days of the arbitrator’s appointment. While the arbitrator’s fee must be paid by the parties, it is at a set fee far below the arbitrator’s typical hourly rate (when he is practicing law), and my experience is that the arbitrator’s fee is far less than the cost of getting ready for trial several times only to be postponed at the last minute. The hearings are more cost-efficient due to less pre-trial preparation, fewer in-person witnesses (with the use of written evidence and telephone testimony), and therefore, are less expensive than trial.
The problem with the Court Mandated Arbitration system is that the Arbitration result is appealable, by either party, and the matter is then set for trial through the normal scheduling system. This aspect of the system is expensive, and frankly, wasteful. The good news is that after having their “day in court” before an arbitrator, most clients do not appeal, so, on the whole, the system works.
I encourage clients to enter into an agreement with the opposition before the Arbitration hearing which makes the Arbitration binding. Most do, and this avoids the expense of a trial.
Arbitration due to prior agreement. Many contracts provide that disputes will be resolved by “binding arbitration”. This means that there is no appeal of the Arbitrator’s decision. Perhaps the most common contract with an arbitration agreement is the Earnest Money Agreement commonly used today to buy and sell real estate, although other examples include employment agreements and agreements for handling disputes over products sold, particularly in the commercial world. Sometimes the agreements even specify which arbitration service will hear the dispute, generally either the Arbitration Service of Portland or the American Arbitration Association. These services have their own fees and rules. Arbitration services hand select their arbitrators from experienced litigators.
The process is started by the filing of a claim rather than a complaint. The opposing party can admit or deny claims, and can allege his claims as well. The hearing is generally heard more quickly than it would be heard in court and there are no postponements due to overbooking by the decision maker.
The hearings often include written evidence and/or testimony by telephone, and are typically less expensive than trial. The findings of the arbitrator are generally binding. With the more certain scheduling than the courts, and the binding result, this system is an excellent way to resolve disputes. I am a member of the arbitrator panel for the Arbitration Service of Portland; so once again, I get to see these cases as an advocate as well as a decision maker.
Arbitration by Agreement after the Dispute has arisen. Parties that could litigate in Court, often with the advice of their attorneys, decide to arbitrate after a dispute has developed. They hire an attorney to be the arbitrator and often agree upon the rules of one of the arbitration services. Since the parties and their attorneys choose the arbitrator, they generally respect the decision.
The process may be started by the filing of a claim, rather than a complaint, or may be agreed upon after a lawsuit is started, in which case the arbitration can use the existing pleadings, i.e. court documents setting out the allegations of the parties. The hearing is generally heard more quickly than it would be heard in court and there are no postponements due to overbooking by the decision maker.
The hearings often include written evidence and/or testimony by telephone, and are typically less expensive than trial. The findings of the arbitrator are generally binding.