RPCN publishes a monthly newsletter to keep its members informed about coming events, meetings, etc., as well as articles of interest to enhance their professional development. Members are invited to submit articles based on their own expertise and experience. Each month an article from the RPCN Newsletter will be reproduced on this page for the benefit of all.

The definition of Arbitration is: "when one does not go to court, but picks someone to decide the case informally." It is a process by which the parties to a dispute submit their differences to the judgment of an impartial person or group appointed by mutual consent.

Aristotole wrote: "For an arbitrator goes by the equity of a case, a judge by the law, and arbitration was invented with the express purpose of securing full power for equity." Arbitration is not an innovation. It has existed for centuries.

The perception of arbitration is that instead of litigation, arbitration appears to be quick, low-cost method of dispute resolution that serves the interests of all concerned. Generally speaking. lawyers hate arbitration because the lawyers have very little control over the arbitrator's decision.

When a business person signs a business contract, it parallels to the "bliss of love." Everything is wonderful! However, this can turn into doom and gloom. The same scenario can happen with business contracts. The business relationship grows to be overripe and one of the parties is stepping on the other party's kumquat. The business people then turn to their contracts and find the following remedy clause: "Any controversies or claims arising out of, or relating to this contract, shall be settled by arbitration in accordance with the rules of the arbitration association."

Arbitration cannot validly occur unless the parties have specifically agreed to use this process to settle their dispute. Most of the time, the parties did not realize they had agreed to arbitration as they were more involved with the business dealing than remedies for dispute.

Now the cash register commences to ring. There is a non- refundable filing and administrative fee associated with an arbitration association which is a sliding fee based on the amount of the claim. The arbitrator's fee can be quite high based on the complexity of the case.

The promise of quick, low-cost dispute resolution may not be realized because arbitration is sometimes as hard-fought as court battles. Discovery could be abused by lawyers who use "vacuum- cleaner" tactics to gain all available evidence and at the same time burden one of the parties with heavy production requirements.

Arbitration has some distinct shortcomings as follows that most business owners do not comprehend and perhaps never experienced prior to being faced with arbitration:

1. Arbitration is final and binding on the parties.
2. Parties are waiving their right to seek remedies in court, including the right to a jury trial.
3. Discovery can be more limited or excessive and is different from discovery in judicial pro ceedings.
4. The arbitrator's award is not required to include factual findings or legal reasoning and any party's right to appeal or to seek modifi cation of the arbitrator's rulings is strictly limited.
5. The possibility exists that the arbitrator may be affiliated with an industry where there is a conflict of interest.
6. Rules relative to admissibility of evidence and applicable law are not the same as in court.

Critics of arbitration complain that some arbitrators are inattentive in the proceedings, ignorant of the relevant law and of arbitration procedures, capricious and inconsistent in their rulings, and biased in favor of a particular industry.

In summary, this is not an "I hate arbitration" article but a call to business people for awareness that there are disadvantages to arbitration. I am sure there are advantages, but I, personally, have never found or experienced them!