Who is an Arbitrator?

Introduction

An arbitrator is a professional that works to increase communication between two sides of a dispute. The process of arbitration is an Alternative Dispute Resolution (ADR) that avoids litigation, which can be a time consuming, public and costly process. Arbitrators can fill a variety of roles especially in contract negotiation and commercial disputes so effective arbitrators have knowledge and experience in the dispute that they seek to resolve.

What is the role of an arbitrator?

In all circumstances except non-binding arbitration, the arbitrator has the final word on resolving the dispute and makes a judgment as per provisions detailed in contractually mandated arbitration hearings. Legislation may make arbitration binding so as to reduce the burden that civil cases will have on the courts system. Therefore, it is in the interest of the courts to have the word of the arbitrator be final and binding. The arbitrator decides an “award” of damages against a party which may involve monetary damages and declarations to refrain from certain activity, grant a service promised by contract or rectify the terms and conditions of an agreement between two parties. A panel of more than one arbitrator is called an arbitration tribunal and those individuals confer on the proper award. Unanimous support of the award may be required by the parties but it is not mandatory.

What is the role of the arbitrator in non-binding arbitration?

In non-binding arbitration, the arbitrator is merely an observer who (in their professional opinion) determines the rights of the parties and establishes an approximate benchmark of the damages with will be due. From there the parties will either pursue the case through litigation, binding arbitration or reach a settlement using the non-binding determination of the arbitrator.

Can an arbitrator ruling be challenged?

As a general rule, jurisdictions do not intervene in arbitration agreements unless there is a clear case of fraud or arbitrator bias. There may also be the possibility that the arbitrator does not have the jurisdiction to order the conditions stated in the award. Additionally, the courts may monitor arbitration proceedings if it is a serious civil case that requires due caution and involves serious ramifications for the parties if the wrong determination is made. As the parties have agreed, either by contract or prior to seeking arbitration, it is expected that they will abide by the rulings of the arbitration proceedings, as they are they of their own accord.

Government agencies, such as the Securities and Exchange Commission do not interfere with arbitrator decisions and instead direct parties to seek recourse in the legal system. Parties that disagree with the arbitrator’s decision may file a “motion to vacate” the decision. Motion to vacate filings are rarely granted as the party must prove that they were prevented from making their case, which is not only difficult to prove, but rarely occurs. Motions to vacate must be served within three months (or potentially less in some jurisdictions) and frivolous filings may entitle the other party to recoup legal fees from the filing party.

Sources: http://www.sec.gov/answers/arbappeal.htm

NEXT: Arbitrator Qualification