Historically, arbitration and mediation have existed as alternative dispute resolution (ADR) methods.
The Duty to Arbitrate
Generally, a party can’t be compelled to arbitrate a dispute unless he or she has contractually bound himself or herself to do so. However, do not be misled by this statement. A contractual obligation to arbitrate a dispute does not arise solely from written contracts between parties, but rather, may be created in a variety of ways such as a court order.
Arbitration Rules And Procedures
The arbitration process is governed by state and federal law, as well as, by the rules of the arbitration forum itself. During the arbitration process, a variety of disputes may arise. Those disputes may involve everything from the location of the hearings to the composition of the hearing panel, which disputes can be arbitrated, what discovery can be obtained, along with a host of other concerns.
Most states, such as the state of Michigan, have provisions in their civil practice rules that apply to the arbitration process. These rules provide a basic framework for the arbitration and due process considerations, as well as procedures for confirmation of the arbitrator’s award, a procedure that gives an arbitration award the force in effect of judgment after trial in a court. Many states, such as Michigan, have adopted the uniform arbitration act.
In normal court proceedings, all parties to such proceeding are entitled “discovery”. Discovery, in common terms, is the taking of depositions, the exchange of interrogatories, and requests for production of documents in the basic exchange of information, and in documents prior to actual trial. In arbitration, there is very little discovery. Restrictions on discovery keep the arbitration process in line with its intended purpose. That being, the process by which to provide speedy and cost efficient methods of resolving disputes.
To date, depositions are still not available in arbitrations. However, having participated in many arbitrations, along with many court proceedings, it is this Arbitrator’s belief that when balancing the benefits of the arbitration process over court litigation, depositions are not always necessary in all but extreme cases. Arbitrations are not governed by the rules of evidence, which apply to trial courts and there is a certain amount of leeway when questioning witnesses. This leeway, an informality in arbitration proceedings, enables skilled attorneys to obtain information from witnesses during the course of hearings themselves. Further, this process coupled with the usual month-long breaks between arbitration sessions, provides attorneys with ample opportunity to investigate claims made during the testimony, without delaying the proceedings further, and without encumbering the financial resources of either party within these depositions and/or discovery requests.
Stipulations entered into between the parties, as to factual matters not in dispute, can go a long way toward moving a hearing along. Stipulations can considerably shorten the presentation of evidence and will help to resolve issues quickly. While stipulations are actively encouraged in most courthouses across the country, arbitration forums to not actively encourage the parties to enter into stipulations.
With “the judge” not “forcing” the parties to at least meet and discuss possible stipulations, there are frequently countless hours wasted in arbitrations where parties attempt to prove facts that are really not in dispute. Typically, these issues could easily be resolved by stipulation.
Over the years, arbitration has matured and changed in many ways. A successful arbitration hearing, however, requires careful preparation and thought. The process of arbitration should not be taken lightly, with the thought of being insignificant or unimportant because it is not an “in court proceeding”. The participants often have hundreds of thousands or millions of dollars at stake in arbitration, and the procedure, regardless of how small the dollar amount, is as serious, as important, and as binding as a trial.
It has been this Arbitrators experience, that arbitration can be a cost effective procedure in alternative dispute resolution [ADR] to determine a just and equitable resolution of the dispute.
The process begins by the attorneys and/or Judge selecting the correct arbitrator or arbitrators for the dispute in question. Arbitrators do not have to be attorneys. Mr. Umlauf is a non-attorney who has presided over numerous arbitrations. He has been selected by both judges and/or mutual consent of the attorneys when the matter in dispute is financial in nature. It is possible, that during the arbitration process a legal question could arise. If that situation were to occur, the arbitration agreement or the court order to arbitrate, would allow for the non-attorney to seek the direction of the Court. It should be noted, that in Mr. Umlauf’s 35 years of arbitration this situation has only occurred once.