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Arbitration, in the context of United States law, is a form of alternative dispute resolution — specifically, a legal alternative to litigation whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party (the arbitrator(s) or arbiter(s)) for resolution. In practice arbitration is generally used as a substitute for judicial systems, particularly when the judicial processes are viewed as too slow, expensive or biased. Arbitration is also used by communities which lack formal law, as a substitute for formal law. Arbitration is a legal technique for the resolution of disputes outside the courts, wherein the parties to a dispute refer it to one or more persons (the arbitrators or arbitral tribunal), by whose decision (the award) they agree to be bound. ...
// Balancing scales are symbolic of how law mediates peoples interests For other senses of this word, see Law (disambiguation). ...
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A lawsuit is a civil action brought before a court in order to recover a right, obtain damages for an injury, obtain an injunction to prevent an injury, or obtain a declaratory judgment to prevent future legal disputes. ...
Arbitration may also serve a distinct purpose: as an alternative to strikes and lockouts as a means of resolving labor disputes. Labor arbitration comes in two varieties: interest arbitration, which provides a method for resolving disputes about the terms to be included in a new contract when the parties are unable to agree, and grievance arbitration, which provides a method for resolving disputes over the interpretation and application of a collective bargaining agreement. The Collective Bargaining Agreement (CBA) is the contract between the NHL and the NHLPA that defines the structure of procedural, financial, and disciplinary relationships between the NHL, its teams, and its players. ...
Species of Arbitration
Commercial and other forms of contract arbitration Agreements to arbitrate were not enforceable at common law, though once the parties had actually submitted a pending dispute to an arbitrator, the arbitrator's judgment was usually enforceable. The reasoning for this was that the power of the arbitrator arose solely from the mutual consent of the parties to his jurisdiction; but by the time a dispute reached the point that one party wished to take it to an arbitrator, the other often preferred to take their chances in court instead. Thus, without the consent of both parties to his jurisdiction, the arbitrator lacked the power to decide the case.
During the Industrial Revolution, large corporations became increasingly opposed to this policy. They argued that too many valuable business relationships were being destroyed through years of expensive adversarial litigation, in courts whose rules differed significantly from the informal norms and conventions of businesspeople (the private law of commerce, or jus merchant). Arbitration was promoted as being faster, less adversarial, and cheaper. A Watt steam engine in Madrid. ...
A corporation (usually known in the United Kingdom and Ireland as a company) is a legal entity (distinct from a natural person) that often has similar rights in law to those of a Civil law systems may refer to corporations as moral persons; they may also go by the name...
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A lawsuit is a civil action brought before a court in order to recover a right, obtain damages for an injury, obtain an injunction to prevent an injury, or obtain a declaratory judgment to prevent future legal disputes. ...
A convention is a set of agreed, stipulated or generally accepted rules, norms, standards or criteria, often taking the form of a custom. ...
Commerce is the trading of something of economic value such as goods, services, information or money between two or more entities. ...
The result was the New York Arbitration Act of 1920, followed by the United States Arbitration Act of 1925. Both made agreements to arbitrate valid and enforceable (unless one party could show fraud or unconscionability or some other ground for rescission which undermined the validity of the entire contract). The USAA is now known as the Federal Arbitration Act. Due to the subsequent judicial expansion of the meaning of interstate commerce, the U.S. Supreme Court reinterpreted the FAA in a series of cases in the 1980s and 1990s to cover almost the full scope of interstate commerce. In the process, the Court held that the FAA preempted many state laws covering arbitration, some of which had been passed by state legislatures to protect their consumers against powerful corporations. This article does not cite its references or sources. ...
Article I, Section 8, Clause 3 of the United States Constitution empowers the United States Congress To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes. The Commerce Clause has been the subject of intense constitutional and political disagreement centering on the extent to...
The Supreme Court Building, Washington, D.C. The Supreme Court Building, Washington, D.C., (large image) The Supreme Court of the United States, located in Washington, D.C., is the highest court (see supreme court) in the United States; that is, it has ultimate judicial authority within the United States...
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Since commercial arbitration is based upon either contract law or the law of treaties, the agreement between the parties to submit their dispute to arbitration is a legally binding contract. All arbitral decisions are considered to be "final and binding." This does not, however, void the requirements of law. Any dispute not excluded from arbitration by virtue of law (e.g. criminal proceedings) may be submitted to arbitration. The law of treaties is that part of international law which deals with legally binding agreements between states, generally referred to as treaties. ...
A contract is a legally binding exchange of promises or agreement between parties. ...
Labor arbitration Arbitration has also been used as a means of resolving labor disputes for more than a century. Labor organizations in the United States, such as the National Labor Union, called for arbitration as early as 1866 as an alternative to strikes to resolve disputes over the wages, benefits and other rights that workers would enjoy. Governments have also relied on arbitration to resolve particularly large labor disputes, such as the Coal Strike of 1902. The National Labor Union was the first national labor federation in the United States. ...
Political cartoon from the Cleveland Dealer The Coal Strike of 1902 was a strike by the United Mine Workers of America in the anthracite coal fields of Pennsylvania that marked a change in the role of the United States government, which had historically sided with management, to functioning more as...
This type of arbitration is commonly known as interest arbitration, since it involves the mediation of the disputing parties' demands, rather than the disposition of a claim in the manner a court would act. Interest arbitration is still frequently used in the construction industry to resolve collective bargaining disputes. The United Steelworkers of America adopted an elaborate form of interest arbitration, known as the Experimental Negotiating Agreement, in the 1970s as a means of avoiding the long and costly strikes that had made the industry vulnerable to foreign competition. Major League Baseball uses a variant of interest arbitration, in which an arbitrator chooses between the two sides' final offers, to set the terms for contracts for players who are not eligible for free agency. The United Steel Workers of America (USWA) claims over 1. ...
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Unions and employers have also employed arbitration to resolve employee grievances arising under a collective bargaining agreement. The Amalgamated Clothing Workers of America made arbitration a central element of the Protocol of Peace it negotiated with garment manufacturers in the second decade of the twentieth century. Grievance arbitration became even more popular during World War II, when most unions had adopted a no-strike pledge. The War Labor Board, which attempted to mediate disputes over contract terms, pressed for inclusion of grievance arbitration in collective bargaining agreements. The Supreme Court subsequently made labor arbitration a key aspect of federal labor policy in three cases which came to be known as the Steelworkers' Trilogy. The Court held that grievance arbitration was a preferred dispute resolution technique and that courts could not overturn arbitrator's awards unless the arbitrator exceeded his or her authority,engaged in fraud or corruption, or violated basic due process. The Amalgamated Clothing Workers of America was a United States labor union known for its support for social unionism and progressive political causes. ...
Combatants Major Allied powers: United Kingdom Soviet Union United States Republic of China and others Major Axis powers: Nazi Germany Italy Japan and others Commanders Winston Churchill Joseph Stalin Franklin Roosevelt Harry Truman Chiang Kai-Shek Adolf Hitler Benito Mussolini Hideki Tojo Casualties Military dead: 17,000,000 Civilian dead...
Capitalizing on labor shortages during Americas entrance into World War I, unions led by Samuel Gompers under the American Federation of Labor organized mass strikes for tangible gain. ...
Securities arbitration In the United States securities industry, arbitration has long been the preferred method of resolving disputes between brokerage firms, and between firms and their customers. The securities industry uses a pre-dispute arbitration agreement, where the parties agree to arbitrate their disputes before any such dispute arises. Those agreements were upheld by the United States Supreme Court in Shearson v. MacMahon, 482 U.S. 220 (1987) and today nearly all disputes involving brokerage firms are resolved in arbitration.
The process operates under its own rules, and is described in an article Introduction to Securities Arbitration. Securities arbitrations are held primarily by the NASD Dispute Resolution program and the New York Stock Exchange.
Judicial arbitration Some state court systems have promulgated court-ordered arbitration; family law (particularly child custody) is the most prominent example. Judicial arbitration is often merely advisory dispute resolution technique, serving as the first step toward resolution, but not binding either side and allowing for trial de novo. Litigation attorneys present their side of the case to an independent teritary lawyer, who issues an opinion on settlement. Should the parties in question decide to continue to dispute resolution process, there can be some sanctions imposed from the initial arbitration per terms of the contract.
Proceedings Various bodies of rules have been developed that can be used for arbitration proceedings. The two most important are the UNCITRAL rules and the ICSID rules. The rules to be followed by the arbitrator are specified by the agreement establishing the arbitration. The United Nations Commission on International Trade Law is a body of member and observer states under the auspicies of the United Nations. ...
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Done at New York, 10 June 1958; Entered into force, 7 June 1959; 330 U.N.T.S. 38, 1959) provides for the enforcement of foreign arbitral awards on the territory of the contracting parties. Similar provisions are contained in the earlier Convention on the Execution of Foreign Arbitral Awards (Done at Geneva, 26 September 1927; Entered into force, 25 July 1929; L.N.T.S. ???). The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Also known as the New York Convention; the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards; and the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards) was signed in 10 June...
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Some jurisdictions have instituted a limited grace period during which an arbitral decision may be appealed against, but after which there can be no appeal. In the case of arbitration under international law, a right of appeal does not in general exist, although one may be provided for by the arbitration agreement, provided a court exists capable of hearing the appeal.
When arbitration occurs under U.S. law, either party to an arbitration may appeal from the arbitrator's decision to a court, however the court will generally not change the arbitrator's findings of fact but will decide only whether the arbitrator was guilty of malfeasance, or whether the arbitrator exceeded the limits of his or her authority in the arbitral award or whether the award conflicts with positive law. The Supreme Court has described the standard of review as one of the narrowest known to Western jurisprudence. Wherever so seen, arbitration may be the best approach to the legal manners and parties involved.
Arbitrators Arbitrators have wide latitude in crafting remedies in the arbitral decision, with the only real limitation being that they may not exceed the limits of their authority in their award. An example of exceeding arbitral authority might be awarding one party to a dispute the personal automobile of the other party when the dispute concerns the specific performance of a business-related contract.
It is open to the parties to restrict the possible awards that the abitrator can make. If this restriction requires a straight choice between the position of one party or the position of the other, then it is known as pendulum arbitration or final offer arbitration. It is designed to encourage the parties to moderate their initial positions so as to make it more likely they receive a favourable decision.
No definitive statement can be made concerning the credentials or experience levels of arbitrators, although some jurisdictions have elected to establish standards for arbitrators in certain fields. Several independent organizations, such as the American Arbitration Association and the National Arbitration Forum[1], offer arbitrator training programs and thus in effect, credentials. Generally speaking, however, the credibility of an arbitrator rests upon reputation, experience level in arbitrating particular issues, or expertise/experience in a particular field. Arbitrators are generally not required to be members of the legal profession. The American Arbitration Association (AAA) is one of several arbitration organizations that administers arbitration of disputes brought to it by members of the public. ...
To ensure effective arbitration and to increase the general credibility of the arbitral process, arbitrators will sometimes sit as a panel, usually consisting of three arbitrators. Often the three consist of an expert in the legal area within which the dispute falls (such as contract law in the case of a dispute over the terms and conditions of a contract), an expert in the industry within which the dispute falls (such as the construction industry, in the case of a dispute between a homeowner and his general contractor), and an experienced arbitrator.
Critics Critics of arbitration argue that contractual requirements to arbitrate can be unfair to employees or consumers who have no power to negotiate what is often a form contract. In these cases, the choice of arbiter may be spelled out in a contract. The arbitration panel may contain industry experts who may be more sympathetic to the industry than to the individual. Also, some have argued that the fact that an arbitration company may handle many cases for a corporation while an individual rarely goes through arbitration twice may bias the arbitrators in favor of the company. On this note, many arbitration companies have these corporations as their sole source of income, further biasing their judgments. The fact that most arbitral procedures are not public, and that there may be no provision for an individual to be represented by counsel, may also work to the disadvantage of the individual. These potential disadvantages make the ethics and professionalism of arbitrators even more important.
Arbitration in the U.S. has also been criticized because of the unavailability of appellate review. Although the New York and federal arbitration laws were based on the English arbitration law of 1898, they omitted the English provision permitting for de novo review of questions of law. Thus, American courts can overturn arbitral rulings only for extremely gross procedural errors that violate due process, but cannot reverse most substantive errors. In United States law, adopted from English law, due process (more fully due process of law) is the principle that the government must normally respect all of a persons legal rights instead of just some or most of those legal rights when the government deprives a person of life...
Unlike judicial opinions, arbitration opinions are often confidential. As a result, the law relating to activities (such as reinsurance contracts and certain types of securities industry disputes) where contracts to arbitrate are widespread may develop more slowly because the usual process of creating precedent is not available. In law, a precedent or authority is a legal case establishing a principle or rule which a court may need to adopt when deciding subsequent cases with similar issues or facts. ...
Critics say arbitration can mean high filing fees, unqualified arbitrators, lost legal rights, limited awards and no appeals. Filing a case in state Superior Court costs from $90 to $185, depending on the amount claimed. Filing fees for arbitration can cost thousands of dollars, depending on the case and the arbitration firm. Fees for hearing rooms and the arbitrator's time can run tens of thousands of dollars more and discourage individuals from pursuing a case.
In court, Judges or other judicial officers hear cases. Many arbitrators are former judges, but some are not even lawyers. Arbitrators are rarely required to follow the law and are regulated in only two states. Judges are usually assigned according to a rotation or by a presiding judge. Parties select arbitrators, usually from a list compiled by an arbitration firm. Firms offer parties various methods of striking names from the list and reducing them to one. If the parties cannot agree, the firm may designate an arbitrator. .
In courts, the right to a fair process is protected by legal safeguards such as discovery, testimony and evidence rules. Court rules do not apply to arbitration, meaning the arbitrator - sometimes guided by an arbitration agreement or the rules of an arbitration firm - controls the process.
Arbitration awards are generally lower than in court, and arbitration agreements sometimes limit the type of damages an individual can recover.
Judges' decisions are public record and subject to appeal. Most decisions by arbitrators are confidential. They cannot be appealed and are subject to judicial review only in narrow circumstances.
Critics say many arbitrators "cut the baby in half" irrespective of the merits of the parties' cases.
Arbitration on TV The "judge shows" that have become popular in many countries, especially the United States, are actually binding arbitration. The most famous example is The People's Court. Judge Marilyn Milian, the current judge, has presided over cases since 2001. ...
References - Jerold S. Auerbach, Justice Without Law?: Non-Legal Dispute Settlement in American History (Oxford: Oxford University Press, 1983).
- Mark J. Astarita, Esq., Introduction to Securities Arbitration (SECLaw.com, 2000 - www.seclaw.com/arbover.htm)
- David Sherwyn, Bruce Tracey & Zev Eigen, In Defense of Mandatory Arbitration of Employment Disputes: Saving the Baby, Tossing out the Bath Water, and Constructing a New Sink in the Process, 2 U. Pa. J. Lab. & Emp. L. 73 (1999)
See also For the relevant Conflict of Laws elements, see contract, forum selection clause, choice of law clause, proper law, and lex loci arbitri An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. ...
Conciliation is an alternative dispute resolution process whereby the parties to a dispute (including future interest disputes) agree to utilize the services of a conciliator, who then meets with the parties separately in an attempt to resolve their differences. ...
It has been suggested that Adjudication be merged into this article or section. ...
Expert determination is a historically accepted form of dispute resolution invoked when there isnt a formulated dispute in which the parties have defined positions that need to be subjected to arbitration, but rather both parties are in agreement that there is a need for an evaluation, e. ...
// Mediation comprises an act of bringing two states, sides or parties in a dispute closer together toward agreement through alternative dispute resolution (ADR), a dialogue in which a (generally) neutral third party, the mediator, using appropriate techniques, assists two or more parties to help them negotiate an agreement, with concrete...
Negotiation is the process where interested parties resolve disputes, agree upon courses of action, bargain for individual or collective advantage, and/or attempt to craft outcomes which serve their mutual interests. ...
In law, a special referee acts as a judge on matters of fact only. ...
Subrogation is best known as a concept of insurance law. ...
Tort reform is the phrase used by its advocates who claim it is a change in the legal system to reduce litigations alleged adverse effects on the economy. ...
Conflict of laws, or private international law, or international private law is that branch of international law and interstate law that regulates all lawsuits involving a foreign law element, where a difference in result will occur depending on which laws are applied as the lex causae. ...
In the Conflict of Laws, the validity of a contract with one or more foreign law elements will be decided by reference to the so-called proper law of the contract. ...
A forum selection clause is a clause in a contract in which the parties agree that any litigation resulting from that contract will be brought in a specific forum. ...
A choice of law clause in a contract is one whereby the parties to that contract specify which law (i. ...
The Doctrine of the Proper Law is applied in the choice of law stage of a lawsuit involving the Conflict of Laws. ...
The lex loci arbitri is the Latin term for law of the place where arbitration is to take place in the Conflict of Laws. ...
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