Arbitration

Arbitration is a form of alternative dispute resolution in which parties present their claims to one or more neutral decision-makers — called arbitrators — who review the evidence and render a binding or non-binding decision, called an award. Arbitration is faster and typically less expensive than traditional litigation, and it avoids the public disclosure and procedural formalities of court proceedings. In the personal injury context, arbitration may be compelled by contract or may be chosen voluntarily by both parties as an alternative to litigation.

Arbitration can be either binding or non-binding. In binding arbitration, both parties agree in advance to accept the arbitrator's decision as final, with very limited rights of appeal. This finality is one of arbitration's main advantages — it provides certainty and closure quickly. In non-binding arbitration, the arbitrator's decision serves as a recommendation that either party can reject and then proceed to trial. Non-binding arbitration is often used in court-annexed programs designed to encourage settlement by giving parties a neutral third-party assessment of the likely trial outcome.

The rise of mandatory arbitration clauses in consumer contracts — inserted by hospitals, insurance companies, manufacturers, and service providers into the fine print of their agreements — has been controversial in the personal injury context. Critics argue that these clauses strip injured consumers of their right to a jury trial and force them into a forum that statistically favors repeat players (corporations that arbitrate frequently) over one-time claimants (injured individuals). Consumer advocacy groups have lobbied for legislation restricting the use of mandatory arbitration clauses in personal injury cases.

The arbitration process itself typically involves selection of the arbitrator from a panel provided by an arbitration organization such as the American Arbitration Association or JAMS, an exchange of relevant documents and information, and a hearing at which the parties present evidence and argument. The hearing is less formal than a court trial — rules of evidence are relaxed, and the proceedings are conducted privately. After the hearing, the arbitrator typically issues a written award explaining the decision. Courts have limited authority to vacate arbitration awards, typically only for fraud, corruption, evident partiality of the arbitrator, or exceeding the arbitrator's powers.