What is an Arbitration?

Arbitration is a form of conflict resolution used commonly as a quicker solution to strife as opposed to approaching the problem through litigation. An arbitrator or panel of arbitrators meet with both sides of an argument and their attorneys and come to resolution.

What Constitutes an Agreement to Arbitrate?

Both parties involved in the dispute must agree to arbitrate. Having a signed written agreement is not absolutely necessary as long as a written agreement exists which both sides agree upon, it would be prudent to have signed.

If two parties agree to arbitrate, it does not matter where the arbitration agreement is written. It certainly doesn’t have to be contained within each contracted that may be covered by an arbitration agreement, therefore extra paperwork is not necessary.

What if an Employer Asks You to Join Arbitration?

Can an employer, for example, write up an agreement and require you to sign it, along with an arbitration agreement, on threat on losing your job? Yes, an employer does have the right to require arbitration to solve a problem with an employee.

Are Arbitration Agreements Enforceable?

The Federal Arbitration Act (FAA) establishes a prominent national method of enforcing arbitration agreements. Under the FAA, arbitration agreements are enforceable where a transaction crosses state lines or where a transaction overseas takes place.

However, not all cases fall under those categories, at which point it’s up to the individual state. The Texas Arbitration Act establishes that a written arbitration agreement is enforceable if the agreement is to discuss a conflict which is present at the agreement time or a conflict that emerges after the agreement takes place.

Typically, it is found enforceable if both parties present themselves with intent of solving their problem together. They are both obligated to fulfill whatever conditions the arbitrator decides to solve the conflict.

For employees, simply being aware of an arbitration policy coinciding with employment with the company positing the arbitration is typically enough to create an enforceable agreement.

The agreement may be revoked if a law is present for revocation of the contract. The enforceability of an arbitration agreement can be attacked by the arbitrator if he or she chooses to.

If an agreement has been formed, yet only one side needs to arbitrate, such as an employee or consumer who needs to resolve a dispute, the absence of obligation to a second party essentially makes it unconscionable.

Pros of Arbitration

Arbitration is often sought out as a way to solve conflict while avoiding litigation, court, and trials.

  • Arbitration is an excellent way to discourage unpleasant meetings since both sides have a mutual interest to reach the best goal possible for both groups, rather than in court when one side is competing with the other. This makes it easier to resolve conflict and makes it very unlikely that conflict will escalate.
  • Compared to litigation, arbitration is much faster. One of the most important reason it is so common is due to how much faster it is than going through courts.
  • Arbitration is much easier than the courtroom scene. The parties being much smaller usually know exactly what documents and people will be needed and there is no need to go through interrogations and depositions. This is one of the reasons it is quicker.
  • Arbitration agreements, contrary to litigation, are private usually. The final resolution can also be kept private should both parties agree it is necessary.
  • Arbitration can serve as a temporary delay to litigation. When both a litigation and arbitration are on hold for a case, Texas law acknowledges that the Federal Arbitration Act necessitates the arbitration must come first.

Cons of Arbitration

Having knowledge about both the pros and cons of arbitration can help when deciding on each specific case whether it should go to arbitration.

  • Arbitration is significantly more expensive than litigation. Some are worried arbitrations may tend to favor large companies with more money than their counterparts with fewer resources.
  • There is very little way to contest a final decision, regardless of how fair the arbitrator’s decision is, there may be no way to appeal it and could be kept from ever making a claim.
  • The arbitrators may not be fully objective. There are rising concerns about whether the person choosing the arbitrator may be influenced by either side to choose an arbitrator that may favor one of the two sides. This is especially due to how private arbitrations are, it can be viewed that the extra privacy can lead to extra corruption.

Arbitrations are Commonplace

Arbitrations are becoming more pervasive actively. Due to their shorter lifespan and easier style of coming to a conclusion, they are becoming more favored in the average citizens eyes. The privacy they offer is also highly favored, as well as both sides working together towards an agreement as opposed as both sides arguing for the best possible agreement they can achieve for their own side.

Advice for Employees and Consumers

The most important step is to be knowledgeable about the terms of your arbitration agreements, especially reading agreements you enter with retailers, to see if they necessitate arbitration.

If a company changes its arbitration terms it is required to notify the employee/consumer of their decision. However, they can shoehorn it into a list of several emails and hope that it goes unnoticed, so read everything you receive that you suspect could contain any information pertaining to an arbitration agreement, especially from retailers and pharmacists.

Details of Arbitration

Many parties were quite concerned regarding whether they should choose arbitration or litigation, since it’s such a pain to choose one and realize the other would have been easier or more beneficial. As a solution to that Texas allowed there to be both litigation and arbitration coinciding, which would consist of an arbitration with judicial review.

Whichever side of an arbitration comes out successful contains the rights to appeal, should they be denied an award. This ensures that a court does not overreach and remove an arbitration agreed upon award.