Arbitration is a form of alternative dispute resolution that is commonly used to settle business disputes. It is generally faster and more cost-effective than litigation — and it can help avoid the negative publicity that can come with a lengthy battle in the courtroom. Understanding what happens in arbitration can help ensure you are prepared for the process and can make informed decisions every step of the way.
Here are the steps to expect when arbitrating a business dispute:
1. Agreement to Arbitrate
Both parties must agree to arbitrate the business dispute — this is typically documented in a written agreement. There is often a clause in business contracts that requires the parties to attempt to resolve any disputes that arise in connection with the contractual relationship through arbitration.
Once the parties have agreed to arbitrate, they will select an arbitrator together. It’s crucial to choose an arbitrator who has relevant experience with the type of business dispute at hand. If the parties are unable to agree on the arbitrator’s qualifications, they might agree to a panel of arbitrators.
2. Defining the Procedures, Rules, and Scope
At the outset, the parties must define the procedures and rules that will be used during the arbitration process. Aspects of arbitration to be defined by the parties can include:
- The location of the proceedings
- Communication protocols
- Timelines for each stage of arbitration
- The procedures for presenting evidence
- Setting deadlines for submissions
The parties must also agree regarding the scope of the arbitrator’s authority — and their method for selecting the arbitrator.
3. Discovery
Discovery is typically more limited in arbitration than in litigation. Importantly, the parties to a business dispute can establish their own rules and parameters for discovery. The information that can be sought is tailored to the needs of the case. This can involve expanding, limiting, or even eliminating discovery altogether.
Discovery tools that can be used in arbitration can include the following:
- Document production
- Witness testimony
- Expert reports
- Affidavits
- Depositions
- Interrogatories
Discovery in arbitration can also include electronically stored information. The arbitrator has the discretion to limit the scope of discovery to prevent delay, in accordance with the terms of the terms of the arbitration agreement.
4. The Arbitration Hearing
After each side has gathered the information they need in discovery, they will present their cases at an arbitration hearing. This is similar to a trial, but less formal. At the hearing, both sides will make opening statements that outline the facts of the business dispute, and their legal arguments. They will then present evidence, call witnesses to testify, and cross-examine witnesses.
The arbitrator may ask questions throughout the hearing to clarify the parties’ points. After the evidence has been presented, both sides can make closing statements that summarize the case and argue why the arbitrator should rule in their favor. If the arbitrator requests post-hearing briefs, the parties will need to submit them. After reviewing the evidence in the case, the arbitrator will issue a written decision.
5. The Award
An arbitration award is the final decision issued by the arbitrator — and it is legally binding on all parties. The written award includes the arbitrator’s findings of fact, conclusions of law, and the specific relief granted to the prevailing party. Significantly, the award can be enforced in court if either party refuses to comply.
Contact an Experienced New York Business Attorney
If you are facing a business dispute, a knowledgeable business attorney can help you determine whether arbitration is right for your case. At Barnes & Barnes, P.C., we represent business owners in a wide array of commercial disputes in both litigation and arbitration. Contact us at (516) 673-0674 to schedule a consultation.
