Arbitration, like collaborative or litigation, is a procedural mechanism for resolving divorces, business litigation, and disputes.  It is in essence a process by which the parties agree upon an arbitrator or panel of arbitrators to hear and decide their divorce or dispute.  It is sometimes referred to as “rent a judge” because that is basically what the parties do.  They pay a person or persons they desire to be the judge, hear their case, and render a final decision.

Potential Benefits

Some of the benefits to the parties is they decide who will resolve the dispute if they cannot do so themselves, they have more control over the process than if it were in a court system, and they may by agreement limit any right to appeal or post-hearing process so that there may be more finality to a decision rendered by the arbitrator.  It may also be more private since it is not a public proceeding.

Arbitration is a Contract

Arbitration is a contractual process – both parties must agree and sign a contract to arbitrate.  The arbitration agreement will set out who the arbitrator (or arbitrators) will be.  Alternatively, the contract will set out the method for selecting the arbitrator(s).  It will also determine the powers and authority the arbitrator will have and the rules for the arbitration process itself, such as:

• the arbitrator’s ability to schedule conferences and hearings;
• the arbitrator’s ability to hear and decide motions;
• the rules and deadlines governing discovery and evidence;
• the final hearing date and place;
• whether there will be a record made by a court reporter of any testimony presented at the final hearing;
• what rights, if any, the parties may have to appeal; and
• whether the arbitrator will issue a simple ruling or a reasoned ruling that states the reasons for the arbitrator’s findings, and other important matters.

The arbitration agreement should be well drafted by attorneys experienced with arbitration procedure, trial, and agreements.  It should set out all of the agreements and desires of the parties, since it will be the governing document throughout this process.  Arbitration agreements are governed by the Texas Arbitration Act and the Federal Arbitration Act, and attorneys handling arbitration should be familiar with the laws governing arbitration.

Who Acts as Arbitrator?

Arbitration may be administered privately or as specifically desired and directed by the parties in their arbitration agreement.  It may also be handled by an arbitration or dispute resolution organization, such as JAMS Arbitration, Mediation and ADR Services, the American Arbitration Association, and other such organizations.  Each such organization has its own costs which can be substantial.  These can include substantial initial filing fees, case administration fees, as well as the fees for the arbitrator(s) themselves.  Many parties find these fees exorbitant and prohibitive.  It is not necessary to utilize these arbitration organizations in order to arbitrate matters, as the parties can agree on many procedures and their arbitrator(s) themselves and conduct this process privately.

Power of Arbitrators

The authority of arbitrators is limited, both by the agreement itself but also the law.  Arbitrators act as judges, but they do not have the authority of judges granted by the State.  For example, they cannot hold parties in contempt, they cannot enforce subpoenas, and they cannot compel witnesses to testify.

Arbitration can be a very effective and cost efficient process, especially if well set-up by contract in advance of the dispute arising.  Seek out the advice of counsel familiar with arbitration to see if it may be worthwhile for your divorce or business dispute.