Arbitration, much like mediation or negotiation, is an alternative dispute resolution (“ADR”) method. ADR methods represent alternatives to traditional litigation. Thus, when parties agree to an arbitration, they take the matter of dispute out of a state or federal court.To better understand how arbitration works, it may be beneficial to compare arbitration to litigation and other ADR methods.Negotiation is generally informal and involves a series of offers and counteroffers between the parties, until they reach an agreement to resolve their dispute. It is, by definition, a voluntary process, that may or may not ultimately resolve the dispute.
We involve in Arbitration disputes between Micro, Small and Medium Enterprises (MSME) Contracts and arbitrations revolving around the disputes arising from complaints to the National Stock Exchange, Bombay Stock Exchange and the Multi Commodity Exchange.
Arbitration is intended to avoid the time and expense associated with litigating a dispute. Instead, one person (or sometimes a panel) decides the case. This person, the arbitrator, acts as a substitute for the trial court judge, the jury, and even the appellate court. The arbitrator’s decision is final and it is unlikely to be reversed or modified on appeal.
Sometimes a three-arbitrator panel judges a case. One popular method of appointment is having each party select one of the arbitrators. The two arbitrators then select the third arbitrator. Unless there is an agreement to the contrary, a unanimous decision by the arbitration panel is not required – a majority vote is sufficient.
Virtually all arbitration agreements identify a forum. This is the organization that establishes the parameters of the arbitration, such as who can serve as an arbitrator, who is responsible for paying for the arbitration, limitations on discovery, and whether the parties can request an evidentiary hearing. One of the more common arbitral forums is the American Arbitration Association (“AAA”).
The arbitral forum will typically have a list of “approved neutrals.” These are the people who are permitted by the forum to serve as arbitrators. An arbitrator may agree to arbitrate a dispute for a set fee, although arbitrators typically charge by the hour for their time. Most approved arbitrators are either retired judges or experienced attorneys. However, some organizations, such as the Better Business Bureau, prefer local professionals who are familiar with a subject matter area – such as a structural engineer for a dispute involving the construction of a house.
Unless otherwise specified in the arbitration agreement or the arbitral forum’s rules, it typically is understood that the resulting cost of the arbitration will be split equally between the parties. However, many arbitration agreements require that the party who is seeking to enforce the agreement pay for the cost of the cost of arbitration.
The scope of discovery is more limited in an arbitration proceeding than in a civil action. If the matter was litigated, it is likely that the applicable Rules of Civil Procedure would govern the various forms of discovery available, including interrogatories,[vi] requests for production of documents,[vii] depositions,[viii] and subpoenas to compel individuals to either testify or produce documents
Instead, the arbitrator will follow the rules of the arbitral forum. The arbitral forum will have rules that address the number of depositions that can be taken, number of document requests and interrogatories that can be propounded, and even the number of witnesses who can testify at the hearing.
Some arbitration proceedings are simply a matter of the parties submitting position statements and supporting documents to the arbitrator, who then reviews them and issues a ruling/decision. This is common in disputes between insurance companies in which they are trying to determine which of their insureds caused a wreck (or, if both parties to the wreck were at least partially liable, their corresponding percentage of responsibility).
Other arbitration proceedings result in hearings before the arbitrators or arbitration panels. The procedures established by the arbitral forum will dictate what is permitted into evidence, how long the hearing can last, and whether the parties will be permitted to make opening statements or closing arguments. The arbitrators are the triers of fact, as there are no juries in arbitration proceedings. The authority of the arbitrator to issue subpoenas to require people to attend the hearing or for third parties or for entities or individuals not parties to the dispute to produce documents is also limited.