Arbitration clauses are everywhere. Chances are that you are subject to a few without even knowing it. But what is arbitration, and how is it different from going to court?
Arbitration is a form of alternative dispute resolution. Arbitration is often confused with mediation, which is a form of structured settlement negotiations. Instead, arbitration is an alternative to filing a case in court.
The default form of dispute resolution is going to court. This involves filing a complaint before a state or federal court, litigating the case, and ultimately holding a trial for a judge or jury to make factual and legal determinations. Because of immense procedural laws and processes, it can take years to get to trial. Often the delays involve balancing the need to provide due process to all parties involved, time to carry out civil discovery, and court availability.
Arbitration is private process, meaning the parties have agreed to allow a non-court forum to decide a case. The parties must pay the arbitrator’s fees themselves. There is no right to a jury to decide questions of fact. There is generally no right to an appeal. The decision of the arbitrator, or panel of arbitrators, is final.