SETTLING DISPUTES THE INEXPENSIVE WAY -- THROUGH
ARBITRATION
The traditional American way of settling disputes
of any substance is through court proceedings. While
many individuals still feel that being sued -- and in
some cases, suing -- carries a stigma, most U.S.
businessmen see the courtroom proceedings as nothing
more than a necessary, and usually extremely expensive,
evil. The result is that judges and juries, often
totally unversed in the subject matter of a civil suit,
are hearing everything from divorce cases to
contractual controversies, to bodily damage suits.
Attorneys are grossly over-committed, court schedules
burgeoning with backlogged cases, judges harried, and
jurors more often than not reluctantly impaneled. As a
result, the only prognosis that a defendant and
plaintiff can make with certainty is that, regardless
of the merits of a case, litigation will be slow,
costly, and often inequitable.
There is, however, an alternate method of settling
legal controversies and disputes. It is a considerably
less expensive method than the traditional court trial;
it is a method that not only has its roots in our
common-law legal concept, but also has statutory
recognition at both the federal and state level; and
most importantly, it is effective. The method is
arbitration.
The use of arbitration is not new. It was
practiced by the ancient Greeks and Romans, from whom
we inherited many of our legal concepts. Throughout
American history it has either been used or advocated.
Abraham Lincoln, for example, advocated that lawyers
should try to keep their clients out of the courtroom,
and to illustrate the principle, he arbitrated a
boundary dispute between two farmers. The concept of
arbitration is well established in U.S. labor disputes;
and a well-known U. S. athlete has recently been
released from his contract through an arbiter's
decision.
State and federal statutes require that the courts
recognize arbiter's decisions, and arbitration has been
incorporated into international treaties. The statutes
require that awards under arbitration be given the
force of court judgments, and, if the rules of
arbitration are adhered to (both parties must agree to
the arbiter's use, and must agree to abide by his
decision), the case cannot be re-examined on its merits
or on the basis upon which the arbiter reached his
decision.
Businessmen are not the only ones who can benefit
from arbitration. Even though the no-fault divorce has
done much to remove the soap opera atmosphere from the
divorce proceedings, arbitration would be less
expensive and equally effective, particularly when
substantial amounts of property are involved. In
principle, any kind of contract -- including separation
agreements, contracts of purchase and sale, leases,
etc., may contain a clause stipulating that disputes
may be resolved through arbitration. If a contract
contains this clause, the use of arbitration cannot be
circumvented unless both parties subsequently agree to
it, and the courts will require that the case be
arbitrated rather than going to trial.
Another merit of arbitration is the privacy it
allows. The arbiter hears the case in the presence of
the principals, with judge, jury, spectators and/or
newspaper reporters excluded. Time-consuming legal
maneuvers and issue-clouding rhetoric by over-ambitious
attorneys are eliminated, with the result that a case
in arbitration moves much more quickly to its
conclusion. Moreover, there will be no rules of court
that could conceivably keep relevant information out of
the case, a fact which should do much to assure equity.
Even if the original contract does not contain an
arbitration clause, it can be incorporated into the
document upon the agreement of the parties at a later
date; and, even after controversy has arisen, the
principals may agree to arbitration rather than going
to court. As an advocate of arbitration has said,
"Even when the parties in a dispute can't agree on
anything else, the idea of arbitration may sound good
to them."
Arbitration was criticized in early English
history, because it "ousted the courts of their
jurisdiction." But today, any businessman who has been
to court has learned that most business matters do not
really belong under the jurisdiction of a court. While
business obligations and commitments accumulate at a
steady rate, the court grinds out decisions with mind-
numbing slowness -- especially in cases that require
some expert knowledge in a business matter. Most
experts now agree with former United States Chief
Justice Harlan F. Stone, who said, "(business disputes)
can be better determined by an arbiter with training
and experience in a particular trade or business than
by a judge or jury who have not had that training and
experience."
Arbitration is not a concept to simply be talked
about and pointed to as an idealistic but impractical
dream, but is currently a reality, in the form of the
American Arbitration Association, which has been in the
business of arbitrating disputes for more than 50
years. Recent AAA statistics show that of 35,000 cases
handled, 14,000 involved automobile accidents, 13,000
involved labor-management disputes, and 4,000 involved
contract disputes between businessmen. The AAA also
handled cases involving consumer problems, medical
malpractice claims, and family/personal disputes.
Here's how the AAA operates: It provides the
parties in dispute with a list of arbiters, from which
each party may select arbiters of his choice. Each
party is given seven days to study the list, eliminate
unwanted names, and indicate preferences in the
remaining names, through a numbering system. If the
parties cannot thus agree on an arbiter, the AAA will
submit them another list. If the second list does not
elicit a mutual choice, the AAA will then appoint an
arbiter -- being sure, however, not to appoint one
whose name was eliminated from the list. The parties
are then given the choice of being represented by a
lawyer, or proceeding without a lawyer (the officers of
a corporation may represent their company in
arbitration, but may not do so in a court trial).
The fees of the AAA for this service are a
percentage of the total amount in dispute, beginning at
3% for the first $10,000.00, and declining as the
amount increases. Stenographic records of the
arbitration will be kept only if requested by the
parties, who must then bear the cost of it. The
arbiter will render a written and signed decision,
usually within 30 days. The arbiter's decision is
final and cannot be appealed.
While U. S. courts continue to be glutted with
civil cases, and experts mull ways of expediting the
overburden of cases through these halls of justice,
arbitration as a fast and efficient method of serving
civil equity remains comparatively unpublicized. But
it is available, and can and should be used by more
Americans.
