Increasingly, sales and insurance contracts stipulate mandatory arbitration as the means of resolving disputes with consumers. Consumers who may have overlooked arbitration clauses at signing may be surprised to find that they are unable to proceed with litigation when trying to collect damages from the servicing company. Several states also enforce mandatory arbitration even if the requirement is not spelled out in the original contract. In this case, arbitration must take place before a suit can be filed in court
How is arbitration different from mediation?
Arbitration and mediation are both methods of dispute resolution. While mediation is generally cheaper and less confrontational than arbitration, arbitration is legally binding and is enforced by the courts. Also, unlike mediation, which works from a platform of compromise, arbitration outcomes are usually in favor of one party and against the other. This kind of presentation, therefore, doesn’t lend a cooperative type of atmosphere.
Where mediation can be effective as a first resort, arbitration offers an enforceable alternative if mediation is unsuccessful. Arbitration also can’t be appealed; however, the arbitrator’s decision can be challenged by either disputant within three months after the ruling by filing a Motion to Vacate.
Why do companies like arbitration?
There are several reasons why companies write mandatory arbitration clauses into their contracts. First, arbitration clauses provide a way for companies to keep legal costs down and, as a result, the arbitration process saves them money. Second, in arbitration, there is no drawn out legal process to contend with since arbitration usually resolves disputes in six months or less.
Third, companies usually benefit from the fact that there is no jury and no judge to make critical judgments about the company’s business practices. Fourth, disputants can usually choose arbitrators that are highly skilled in specialized areas of commercial disputes. Last, arbitration hearings are private, which save companies from potentially embarrassing issues and trade secrets from getting out.
What should I do if I need arbitration?
If you find that you need arbitration services, you should choose an arbitration attorney to represent your interests. Arbitration attorneys have the experience and knowledge to explain the process and help you decide if arbitration is necessary and the most effective means to resolve your dispute. A good arbitration attorney will ensure your rights are protected, help you recover costs, and encourage a satisfactory outcome. You can get referrals from friends and family or your local Bar Association.
Sheba Simms - Sheba Simms is a Freelance Writer/Editor. She holds an M.A. in English and Publishing and has worked in the field for over 10 years.
