Arbitration – Frequently Asked Questions
What is arbitration?
Arbitration is a dispute resolution process.
When will a dispute be resolved by arbitration?
A dispute will be resolved by arbitration if the disagreeing parties have previously agreed in writing to resolve future disputes via arbitration.
How do I know if I agreed to arbitration?
You will know if you agreed to arbitration by reading carefully the contract or agreement that governs whatever item/service you purchased or signed up for. Nearly all online services will include an arbitration clause in their standard user licensing agreements. In fact, if you’ve ever clicked “I Agree” before installing software or upon creating a username/password for an online service, you have likely agreed to arbitrate a future dispute.
What if I didn’t know I agreed to arbitrate a future dispute?
If you signed a contract containing an arbitration provision, you will probably be bound to arbitrate future disputes even if you weren’t aware that the contract contained an arbitration provision.
What is the advantage of arbitration?
Arbitration can often be finalized more quickly than litigation in the state or federal court systems. Arbitration is also entirely private: there is no publicly searchable database of pending arbitration cases or their results. Arbitration can also be less formal than litigation. Of course, this depends on the complexity and size of the controversy. Smaller matters such as a consumer purchase can be resolved in a matter of months and via email exchanges and conference calls. More complex matters, such as a large construction project, will likely take over a year to resolve, and may require several in-person appearances in a faraway location and extensive personal testimony.
What are the disadvantages of arbitration?
Arbitration can be expensive. The fees for arbitration are tied to the amount of the controversy: the more expensive the claim, the more expensive the filing fees. More information about arbitration fees can be found at the American Arbitration Association’s website. In addition to filing and administrative fees, arbitrators themselves will have hourly or fixed-rate fee schedules.
Besides the costs, arbitration results can generally not be appealed. In this way, the stakes of arbitration are much higher than those in formal litigation which affords several offers opportunities for appeal.
Who will arbitrate my claim?
It depends on what your arbitration clause says. Some arbitration provisions require the parties to mutually agree on a single arbitrator. Other agreements might require three arbitrators: one party selects an arbitrator, the other party selects another, and the two arbitrators themselves appoint a third. And other agreements might allow for one party to unilaterally select the arbitrator. The same arbitration provision might also require the arbitrator(s) to have certain qualifications (i.e. the arbitrator must have ten or more years of experience in the oil and gas industry).
If my opponent can pick the arbitrator, can they appoint someone favorable to them?
Yes. If your arbitration agreement allows your opponent to unilaterally select the arbitrator, you are at a disadvantage. To take an extreme example, imagine your opponent selecting their mother to arbitrate the dispute. This is admittedly unlikely to happen. However, it is commonplace for corporations to routinely employ specific arbitrators.
Fortunately, Ohio has laws that authorize a local court to review the arbitrator’s determination for things such as corruption, fraud, or undue influence. In this way a party can ensure that they obtained a reasonable result.
Can I appeal an arbitration?
In short, no. The result you obtain at arbitration is quite likely binding and final on all the involved parties. There is no arbitration appeals court.
However, Ohio law allows a local court to modify or vacate an arbitration award. But the court’s review authority is quite limited, and should not be understood as a second chance for a brand-new trial on the merits. In fact, Ohio caselaw strongly favors the arbitrator’s conclusions and routinely cautions Ohio courts from substituting their judgment for the arbitrator’s.
What if I don’t want to arbitrate my dispute?
If you don’t want to arbitrate your dispute, you might still file a lawsuit in your local court system. However, your opponent may simply ask the court to arbitrate the issue per the arbitration clause you agreed to in the contract. If your opponent never asks the court to do that, however, your issue could be resolved entirely within the court system.
