What is Arbitration?

Arbitration is a legal alternative to court used to settle disputes. Each side tries to convince one or a panel of neutral decision-makers such as judges, lawyers, engineers, and other knowledgeable experts. Binding arbitration decisions are recognized in »154 countries.

Most people have seen arbitration, but few realize it. »Popular TV Shows like The People's Court, Divorce Court, and Judge Judy are actually arbitrations, not real courtroom trials. People who appear on those shows and others like Christina's Court, Judge Brown, Judge Alex, and Judge Hatchett, have all signed arbitration agreements.

In today's terms, arbitration is not only a legal alternative to the court system, court systems actually embrace arbitration as a means of obtaining faster, more efficient resolutions to civil disputes while reducing the size of court dockets. For people without much experience with either, arbitration sometimes looks very much like a court trial: both have opening statements, testimony, evidence, witnesses, cross examination, closing statements, and binding decisions rendered by a neutral person after carefully weighing the facts. One might think arbitration modeled itself after the court system, but the reverse is true. The earliest recorded use of arbitration can be found in ancient Egyptian writings, over 5000 years ago — long before the existence of a judicial branch of government.

Here are some of the biggest differences between binding arbitration and court:

• Arbitration is final; court decisions can be appealed and drag on for years
• Arbitration is informal; court is more formal with rules and procedures that (a) make expensive professional representation (lawyers) almost mandatory, and (b) sometimes turn a case upside down on a technicality or rule violation. See our news story »California: Equity Arbitration OK! for a recent example where arbitration prevented exactly that scenario and the California Supreme Court affirmed the arbitrator's power to do so.
• Arbitration is fast with flexible schedules; court dockets are backed up and rigid
• net-ARB can cross geographical boundaries easily; courts sometimes can't cross the street when a town straddles a state border.

Professional, neutral arbitrators, who are often more experienced in the specific subject matter of the dispute than judges, weigh facts and make unbiased, rational decisions. The biggest barrier to more wide-spread use of arbitration is usually cost — which is typically in the thousands. net-ARB reduces that barrier to rubble with its modest, easily affordable fees.

Which is better: the courts or arbitration? Just like anything else in life where you have an option, both have advantages and disadvantages. See what Chief Justice Warren Burger had to say about it by following the link to Why Use Arbitration at the bottom of this page.

No one disagrees however, that arbitration is almost always faster and more convenient than using the court. Now with net-ARB, arbitration is just as affordable as the courts — and why we claim net-ARB has revolutionized arbitration.