Using arbitration to settle business disputes has become a popular alternative to litigation. Some see it as less expensive and more efficient than litigation, and arbitration is also confidential. In contrast, court filings typically are part of the public record, where everyone, including competitors, can access information about a case.
Litigants generally may go to arbitration in one of two ways. First, for smaller disputes, the courts may require mandatory arbitration before a volunteer arbitration. Maricopa County, Arizona requires mandatory arbitration for most controversies in which less than $50,000 is at stake. The arbitrators in these disputes are volunteer lawyers who may or may not have familiarity with the subject matter, and the outcome is appealable to the superior court.
Second, business contracts often make arbitration a compulsory element of resolving disputes. To be legally valid, the parties to the dispute must agree to arbitration at the time the contract is signed or, if the contract does not have an arbitration clause, at the time the dispute needs to be addressed. This article focuses on this type of contracted-for arbitration. Our business attorneys are experienced in both litigation and arbitration, and are committed to advising and representing you in whatever form of dispute resolution you require. To discuss a results-oriented solution, consult one of our Phoenix business arbitration lawyers.
What Is Arbitration?
Arbitration occurs in business and civil matters when two opposing parties come to an impasse on a legal issue. In arbitration, an impartial third party questions and listens to both parties before rendering a decision.
The arbitrator is usually an attorney with specialized knowledge of the matter at hand. For instance, an attorney arbitrating a breach of contract or shareholder dispute should be familiar with the laws and customs dictating behavior in those fields. An arbitrator should also be familiar with the Federal Arbitration Act (FAA), which unifies rules for conducting arbitration nationwide, as well as any state and local arbitration laws. Arizona, for example, has the Revised Uniform Arbitration Act.
How Arbitration Works
An arbitration tribunal typically features more than one member. Arbitrators can be appointed in various ways:
- Direct appointment by the parties to the dispute, but all parties must agree on the choice
- Each party appoints an arbitrator, and those two arbitrators jointly appoint a third tribunal member
- An agreed-upon external entity, such as the AAA, appoints arbitrators with the parties’ agreement.
The parties participating in arbitration take turns explaining to the tribunal how the dispute arose, the differences they could not resolve, what outcome they would prefer, and what concessions they are willing to make. The parties can also exchange relevant documents and call witnesses. After both sides conclude their arguments, the arbitrator will issue a ruling that binds the parties, and generally cannot be appealed absent extraordinary circumstances.
Call a Phoenix Business Arbitration Attorney for Guidance
When your business relationships break down to the point where you need dispute resolution, litigation is always a consideration; however, court proceedings may not always be your best option. Depending on the circumstances, arbitration may be a better solution. Employment disagreements, including restrictive covenants, intellectual property infringement, and shareholder issues, are just some of the issues that arbitration can help resolve. Our Phoenix business arbitration lawyers could provide innovative solutions to help you and your business succeed. Call Giles Law to schedule a consultation.