Arbitration in the United States

Arbitration, in the law, is an administrative alternative to the courts whereby the parties (sides) to a dispute submit their respective positions (through agreement or hearing) to a neutral third party (the arbitrator(s)) for resolution. Any dispute not excluded from arbitration by virtue of inclusion under a legal code (such as criminal law) may be submitted to arbitration.

If either party to an arbitration appeals the arbitrator's decision to a court, that 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. Some states have instituted a limited grace period during which an arbitral decision may be appealed, but after which there can be no appeal.

Some states have stipulated that judges may require either arbitration or mediation of certain disputes as a first step toward resolution, familiy law (particularly child custody) being a prime example.

Arbitrators are not bound by precedence and have great leeway in such matters as: active participation in the proceedings, accepting evidence, questioning witnesses, and deciding appropriate remedies. Arbitrators may visit sites outside the hearing room, call expert witnesses, seek out additional evidence, decide whether or not the parties may be represented by legal counsel, and perform many other actions not usually within the purvue of a court. It is this great flexibility of action which, combined with costs usually far below those of traditional litigation, makes arbitration so attractive.

No definitive statement can be made concerning the credentials or experience levels of arbitrators, although some states have elected to establish standards for arbitrators in certain fields. Generally speaking, 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.

A growing trend among employers whose employees are not represented by a labor organization is to establish an organizational problem solving process, the final step of which consists of arbitration of the issue at point by an independent arbitrator.

To insure 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 consit 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.