Anyone who has ever signed a mobile-phone or other consumer contract, a lease or an employment agreement has probably seen in the contract's fine print a provision known as an "arbitration clause." This widely used legal covenant requires that in the case of a dispute between the parties, the arbitration process be used to resolve their differences. In these situations, both sides to the dispute rely on an arbitrator, also known as a "neutral," for an informed, unbiased resolution.
Arbitration is an alternative to filing a lawsuit, and the arbitrator plays a critical role in settling disagreements. Instead of appearing before a judge in a courtroom, the opposing parties present their case to the arbitrator, whose decision is often final and, only in certain circumstances, cannot be appealed. Arbitration is used instead of courtroom proceedings because it is often quicker, less time consuming and not as costly. In addition to consumer disputes, commercial and real-estate controversies are often handled through the arbitration process. Arbitration is also frequently used to resolve family conflicts such as divorces because it can be cost effective and offers a degree of privacy, since it is not a part of the public record.
Online dispute resolution (ODR) is a relatively new form of arbitration. By using computers and specially developed software, the parties can file an initial dispute, find and appoint an arbitrator, produce evidence and even participate in hearings online. An ODR significantly extends the geographic boundaries in which an arbitrator can work.
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Not unlike a judge in a civil proceeding, an arbitrator carefully considers and analyzes the evidence that both parties to a dispute present at a hearing. The arbitrator draws on knowledge of relevant laws, precedents and policies to thoughtfully weigh the merits of each side's perspective and then determine liability.
The cases that arbitrators handle may be straightforward or extremely complex. In complex cases, they must have experience in the discipline involved, such as engineering, accounting or construction, to name only a few. Because arbitrators often must have specialized expertise, workers returning to the job market and those considering a second career may be well suited to this role. Parties to disputes often find that hiring an arbitrator with the appropriate background is preferable to litigation, since litigation does not afford litigants the option of selecting a judge based on qualifications.
An arbitrator will often encourage and facilitate communication between disputants and attempt to bring them to a settlement before an official hearing takes place. In such instances, he or she may guide negotiations and moderate meetings between the parties. If a settlement is reached, the arbitrator must then memorialize the understanding in writing, drafting a settlement agreement for both sides to sign. If the arbitration case proceeds to a full hearing, the arbitrator is responsible for drafting a written decision to support the findings, based on the evidence presented.
Arbitrators meet disputants and conduct hearings in a conference room mutually agreed upon by the opposing parties to a dispute. This can be a meeting room of one of the parties, or a public facility. The arbitrator must travel to the meeting site, with the expense split equally between the parties. Some businesses, government agencies and labor unions hire full-time salaried arbitrators who are provided offices for use when working on cases.
Many arbitrators are affiliated with non-profit professional organizations and, in that case, the organization's facilities are usually used for negotiations and hearings. In the United States, the American Arbitration Association is the largest, and has offices across the country and in Canada. In the United Kingdom and Europe, the ICC International Court of Arbitration provides arbitration services in 35 languages.