6 Things You Should Know About Arbitration

1. Arbitration is a process where you agree to resolve disputes outside the court system. It does not mean no lawyers will be involved, it means no lawsuit is filed. An arbitrator decides which party will prevail. Usually the dispute arises from some sort of contract and can include a freelancer agreement, employment agreement, trademark license, and other types of contracts.

2. Arbitrators are generally pro-big business, because they big business uses them a lot and the arbitrators can make a lot of money from repeat business.

3. If you do not have an attorney representing you, you may be at a very serious disadvantage. Just because there is no judge involved does not mean, you should not have representation.

4. The process is often handled like a typical lawsuit, where a lot of discovery is conducted. Meaning the parties ask each other written questions, take depositions, and ask for written documents, emails and other types of evidence.

5. There is an international agreement which says arbitration clauses in contracts have to be enforced and generally speaking the courts will kick cases out when there is an arbitration agreement.

6. Arbitrations can be cheaper, but in terms of cost it is not a day and night difference. Arbitration is not the same as mediation, which is also often used as a means of resolving disputes.

 

Sounds like an interesting topic that I didn't know much about.
I am assuming that it's mostly used to keep the companies records clean?

Who judges the outcome of the event(s) though and aren't bribes more common in these cases?

 

Arbitrators are the judges. I wouldn't say there are straight bribes, but you are not going to get a fair hearing if an arbitrator gets a lot of business from a particular company. Arbitration agreements are very common, and found in a lot of agreements, look at your cell phone agreement for example. If you ever do freelance work, look at your agreement, you may find it there too.

 

Arbitration is part of the legal system in the US, used extensively to keep litigation costs down, but it is only part of the legal system not exclusive. It can involve other countries. If you deal with the US you may enter into a contract with arbitration as part of the agreement.

 

Arbitration tends to be less expensive and with less media attention. What I wonder is, can one legally put a TOS clause on a website to say, "all disputes shall be subject to compulsory and binding arbitration"? Will that starve off potential lawsuits?

 

Even if you agree to arbitration, you can still sue if you can provide reason for court to believe they are not being impartial. As long as you try arbitration you fulfill what actual courts want you to do prior to suing. Main reason companies have arbitration clauses is to avoid frivolous lawsuits and court costs they involve, arbitration is just lot cheaper. Just because you clicked "I agree" does not mean that you now have hands tied. All those people clicking "I agree" without bothering to read every single word would never be able to sue or get damages if that were true.