Arbitration as a means of dispute resolution  Law Offices of Fred M. Duman & Associates 2807 Castro Valley Boulevard     Castro Valley, California 94546 Tel: (510) 537-3388 Fax: (510) 889-1114

Dear Mr. Duman

My sister is currently involved in a dispute, which is being determined by "arbitration" rather than in court.

Please explain what "arbitration" is all about.

T.U., Emeryville

In answer to your question, I will present to you, a recently published, well-written article by the Law Department of the California Association of REALTORS®.  The article, in part, states:

"Arbitration is the term used to describe a form of dispute resolution that occurs outside of the court system. Basically, arbitration is a dispute resolution system where the parties submit arguments and evidence to a neutral person, known as the arbitrator, who then renders a decision, called an award, based upon the evidence and arguments presented....

"Arbitration is actually similar to litigation.  For example, the parties may be represented by attorneys and the arbitrator has decision-making powers much like a judge or jury.  Furthermore, the award issued by the arbitrator is binding upon the parties and can be enforced as if it were rendered in a court of law.

"However, despite the similarities, there are several important differences between arbitration and litigation.  For one, arbitration is not governed by the formal rules of evidence and procedure that are used by courts.  Another difference is that arbitration is usually conducted outside of the supervision of the court system and as such, arbitration is private and confidential.  Finally, arbitration is less time consuming than litigation....

"A...major advantage to arbitration is the cost.  As a result of arbitration being less time consuming, the costs associated with arbitration, such as attorney fees, can be significantly less....  [In addition,] arbitration is private and confidential....

"Another significant advantage to arbitration is that it allows the parties to choose a knowledgeable and informed person to decide the dispute.  For example, if the dispute involves real estate, the parties can select an arbitrator who is already an expert in real estate.  In complex litigation, judges and juries often lack the background and experience to fully understand the dispute.  This requires the parties to spend additional time and effort to educate them on the dispute....

"A typical arbitration starts with the parties to the arbitration agreement selecting an arbitration provider for their dispute.  In some cases, this may mean contacting a private arbitration service or using an arbitrator the parties are already familiar with.  Once the arbitration provider is selected, a hearing is scheduled.  The hearing will be akin to a trial in that the parties will be able to submit evidence, call and cross-examine witnesses, and make arguments to the arbitrator.  In preparation for the hearing, the parties may conduct discovery (i.e. take depositions of witnesses, gather written evidence and documents, etc.)  Also, many arbitrations require the parties to submit formal written statements to the arbitrator in advance of the hearing stating their position on the dispute....

"At all times during the arbitration process, the parties may consult with and be represented by legal counsel.  As such, it is not uncommon for parties to retain an attorney to assist them in preparing for the hearing and to represent them at the hearing itself....

"The cost of arbitration will depend on a variety of factors.  For example, the parties may have legal fees associated with the arbitration.  In addition to attorney fees, arbitration usually involves an initial filing fee of several hundred dollars plus an hourly fee for the services of the arbitrator.  Other costs associated with arbitration can include discovery and witness costs....

"Like any important decision affecting your legal rights, you need to think carefully about arbitration.  Agreeing to arbitration essentially waives your right to have the dispute decided in a court of law and in front of a jury.  Also, there are very limited grounds on which to appeal an arbitration award.  While waiving these rights may be acceptable in the light of the benefits associated with arbitration, these are important issues to consider.  Ultimately, the choice is yours to make."

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4/16/99