What is arbitration?
Arbitration is another alternative to traditional litigation. In arbitration, a single arbitrator or a panel of multiple arbitrators (typically three) are selected and agreed upon by the parties. The arbitrator(s) then "hear" the case/dispute, determine the law and/or industry custom that applies, decides who wins, and makes an appropriate award.
1. Flexibility: The arbitration proceeding, as well as the decision and issuance of an award, can be as formal or informal as the parties request. For example, the parties basically want to know the decision and award, which can take the form of a one page letter, or may want a "reasonable" award, which may be a 20 page discussion of the evidence, the issues, the controlling law or custom, the calculation and basis of the award, etc.
2. Confidentiality, no publicity: Frequently, one or more parties will have trade secret, no publicity or confidentiality concerns. Like meditation (and unlike traditional litigation), arbitration hearings, and the decisions of the arbitrators, can be conducted privately, with the decision issued confidentially.
3. Expediency, cost savings: While it is not always true, many parties to arbitration find that the arbitration process is faster, with a quicker decision, and less expensive than both time and money, then traditional litigation.
4. Arbitrator’s unique experience: While arbitrators frequently are lawyers, there are occasions when experienced members of a specialized industry are needed or helpful. In such circumstances, those industry professionals (who used to be called "the industry man") can lend their expertise to the dispute and allow for an expedited resolution. Examples include complex insurance coverage, oil, and gas development issues, patent/trademark, high-tech industries, etc.
Here is an example:
Several years ago I served as an arbitrator in a tanker-dock allision and pollution case. I relied upon my maritime law background and experience to quickly understand the "safe berth" warranty provisions, the docking sequence and rudder commands, the damage to the ship and dock/breasting dolphins, the damage surveyors' calculations of necessary repairs, financial assessment of loss of use claims, etc. An arbitrator without that background, training, and experience would have been lost in sorting out those issues.