Arbitration Laws

As a form of alternative dispute resolution (ADR), arbitration is a legal technique for resolving disputes in lieu of litigation. In order to do this, an independent third party, the arbitrator, is appointed to make a final decision after hearing both parties in the dispute present their respective sides.

Because arbitration laws vary widely and can be difficult to understand, hiring an arbitration lawyer to represent you can be beneficial. Having a representative who is both experienced with arbitration proceedings and knowledgeable on the subject of the dispute can better ensure that you will get a satisfactory settlement from the proceedings.

Keep in mind, however, that, regardless of whether or not you hire an arbitration lawyer, you should take some time to understanding the laws before you jump into any proceeding.

Types of Arbitration Laws

Arbitration is regulated through state and federal laws, as well as laws that vary between more local regions. While individual state arbitration laws will vary from state to state, all types of arbitration laws fall into one of the following three categories:

• Laws governing arbitration proceedings: These types of arbitration laws are usually enacted by state governments. Keep in mind, however, that procedural rules are determined by the "seat" of the arbitration, a person chosen by the disputing parties. Matters decided by the seat include: disagreements over the appointment of arbitrators, the legal authority of the arbitrators and the validity of an arbitration award. Other procedural rules, including time and place of a hearing and the appointment of experts or assessors, are determined by the arbitrator(s).
• Laws governing the enforceability of arbitration agreements: Arbitration agreements are written contracts stating that the disputing parties have mutually agreed to engage in arbitration. The arbitration agreement can be contained in a main contract, but it is valid, enforceable and irrevocable on its own. The arbitration agreement is governed by the laws that govern the main contract. Still, because the arbitration agreement is seen as separate, claiming that the main contract is invalid does not necessarily affect the validity of the arbitration agreement.
• Laws governing the recognition and enforcement of the award: The final decision made by the arbitrator is known as the award, and it is given to the winning party. The award, which is contained within a written document signed by the arbitrator, is legally binding. Rules on recognition and enforcement of awards depend on the state where the recognition or enforcement is being sought.

U.S. Federal Acts Regarding Arbitration

In the U.S., a few basic Federal Acts govern arbitration proceedings. The American Association of Arbitration (AAA) lists them as the following:

• Administrative Dispute Resolution Act of 1996 is a law that requires federal agencies to enact policies that address alternative dispute resolution (ADR).
• Federal Arbitration Act (enacted in 1925) is a law that outlines arbitration procedures in order to ensure valid and fair outcomes for commercial transactions. Businesses and employers sometimes use the FAA to resolve their disputes.
• Uniform Arbitration Act is a law intended to unify and harmonize arbitration law for the entire U.S. Because different states have enacted their own laws to oversee and govern arbitration proceedings, this Federal Act attempts to make them a bit more uniform across various states.

Different arbitration service providers also have their own rules and procedures, which will vary depending on whether the dispute at hand is commercial, family or business related.

Resources

American Arbitration Association (2007). AAA Laws and Statutes. Retrieved March 7, 2008, from the ADR.org Web site.

Astaria, Mark J., Esq. (2007). Overview of the Securities Arbitration Process: Arbitration Rules and Procedures. Retrieved on March 7, 2008, from the SEClaw.com Web site.

Ben Beaumont (n.d.). UNCITRAL Case Law. Retrieved March 7, 2008, from the Arb-Law.com Web site.

Shimabukuro, Jon O. (2003). The Federal Arbitration Act: Backround and Recent Devlopments. Retrieved on March 7, 2008, from Web site.