What is Arbitration?

Arbitration is an alternative dispute resolution procedure that is similar to an informal court hearing. Because arbitration is less formal than a regular court trial, arbitration participants will have a better opportunity to interact one-on-one and tell their side of the story to the arbitrator. Arbitration also tends to be less time consuming and less costly than a regular court trial.

The arbitration process can be used in a wide variety of legal matters, including family law, personal injury and employment cases.  At an arbitration hearing, the disputing parties present their arguments and evidence to a third-party arbitrator or panel of arbitrators who then make a decision on the matter.

Typically arbitrators have a legal background in the subject matters that they arbitrate, in addition to specialized arbitration training.

Most arbitrations occur as the result of an arbitration clause in a contract stating that all disputes related to that contract must be resolved through arbitration. Arbitration clauses in contracts typically determine the rules, procedures and arbitrators that will govern the arbitration.

Many state courts mandate arbitration for certain types of cases such as divorce, child custody, or personal injury, for example. Some state courts may permit arbitration by party request and the consent of both parties.

Arbitration can be binding or non-binding depending upon the prior agreement of the parties. A binding arbitration decision has the same effect of a court order, and a non-binding arbitration decision can function as a good starting point for settlement negotiations. Court ordered arbitration is typically non-binding, unless both parties consent to the decision as binding.

The parties to arbitration are permitted to hire legal counsel, or they may represent themselves. However, the monetary savings of arbitration lies in the avoidance of court costs and attorneys’ fees.

Check your contract to find out the details related to your specific arbitration agreement. If you would like to draft an arbitration into your contract, click this affiliate link and search for an arbitration agreement.

The information on this website is intended as general legal information only and should not form the basis of legal advice of any kind. Individuals seeking specific legal advice should consult a lawyer.

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New Jersey lawyer turned blogger, podcaster and legal changemaker.