Arbitration is usually like adversarial litigation, except a neutral “arbiter” or panel of arbiters render a decision to resolve the conflict after hearing evidence. Arbitration is defined by state and federal statutes. The arbitration process is governed by arbitration protocols agreed to in advance by the parties. Often arbiters are chosen because they have expertise in some subject matter. So, the arbiter is both a judge and an expert. Consequently, arbitration is often selected because the case require technical knowledge of the decision-maker — technical knowledge that a publicly elected or appointed judge would not possess. Sometime parties want a more speedy hearing not available due to over-crowded court docket. Arbiters may allow more time for hearing evidence since they are paid on an hourly basis.
Arbitration may be binding or non-binding. Using non-binding arbitration is one way to get an independent opinion of the strengths and weakness of a party’s case, but this is expensive. Binding arbitration is like a getting a decision from a trial judge, but there is no appeal.
Arbitration is sometimes used in family law cases for some of the reasons mentioned above, especially where there are complex financial issues or complex family dynamics. A state statute allows a court to refer divorcing parties to binding or non-binding arbitration ONLY on agreement of the parties.
Arbitration and mediation may be combined with mediation coming before or after arbitration. In the Arb-Med sequence, the neutral acts as an arbiter but seals his/her decision and does not reveal it to the parties. Then the neutral switches to a mediation session in an effort to help the parties reach and agreement. Knowing that the neutral has already made a decision sometimes helps the parties reach an agreement.
In the Med-Arb sequence, the neutral first conducts open session mediation. Private break-out sessions would be excluded since the neutral should not get information not shared with the other party. The parties may make partial or complete agreements on all issues. If the parties have a partial agreement, then the neutral after hearing some evidence can make a decision for the parties. This saves the parties having to go to court for an additional costly proceeding.
Also, the parties may agree to bracket the arbiter’s decision so that the arbitration decision is not outside the range of the parties proposal. This is called “base-ball” arbitration.