Why Arbitration?

Why arbitration you ask?  Most people have heard of it, but not many really know what the process is, or what is involved. Many people think it is something that is used by large groups, sports team, unions or big business. A few people have heard of it being used for smaller disputes like a condo association or home owner's associations. Most people don't realize arbitration can be an alternative in most civil cases.

There are many different types of arbitration. It can be contractually required, optional, court ordered, voluntary, or it can be used as a voluntary trial resolution. It can be binding or non-binding. To really confuse things it can be non-binding that becomes binding. It can be appealed in some cases and not in others. There can be one arbitrator or a panel. The arbitrator(s) can be chosen by you, or assigned by the court. Before you throw your hands in the air in utter confusion, read on. This article will discuss some simple distinctions about arbitration and why it is a valuable, and cost-effective alternative to traditional litigation.

Let's start by saying that every state has different rules regarding arbitration. You will have to check the statutes and rules in your state to determine exactly what your options are, or you can check with your attorney to find out if it is a good alternative for your situation. Another thing to consider is that some jurisdictions pay the arbitrator and some do not. For example, in New York, attorney client fee arbitration is free for the client, and every attorney must make the information available to the client. For the purposes of this article, we will be dealing only with Florida laws, rules and procedures.

Florida defines arbitration as: "A process whereby a neutral third person or panel, called an arbitrator or arbitration panel, considers the facts and arguments presented by the parties and renders a decision which may be binding or non-binding..." F.S. 44.1011(1). The practice of arbitration has been around almost as long as mankind. Arbitration was traditionally used by asking a neutral neighbor or fellow merchant to hear a dispute and all parties agreeing to abide by the decision.

Florida has three basic types of arbitration:

1.  Binding and non-binding court ordered arbitration
2.  Binding and non-binding non-court ordered arbitration (contract clauses for example)
3. Voluntary trial resolution in which the arbitrator conducts a hearing, renders a decision and that decision is appealable

This article will focus on the court processes. Non-court ordered arbitration has its own set of rules, procedures and requirements that will be covered in other articles.

The Organian Counsel of Elders-
Star Trek. Stardate 3198.4

So, you ask, what is an arbitrator? An arbitrator can be an individual or a panel. The panel is usually comprised of three individuals with one of them being appointed chief arbitrator. A majority of the three can render decisions, but only the chief arbitrator can issue subpoenas, administer oaths and affirmations and apply to the court to compel or enforce production or appearances. Another form of arbitrator is the trial resolution judge who has the authority of a chief arbitrator and who can determine any question and render a final decision in a voluntary trial resolution.

As an example, let's say the lawsuit has been filed, the parties have tried and failed at mediation, and everyone appears before the judge. The judge can continue the process in the traditional litigation track, or the judge can resort to arbitration. There are three possible arbitration methods the judge can seek:

• The court can order the parties to mandatory non-binding arbitration for most civil cases.* What this means is that the parties must attend arbitration. The judge will receive the arbitration decision as an "advisory" opinion. However, if the parties do not object to the arbitrator's opinion, the court will adopt it and it will become the court's final decision. Make sure you speak with your attorney, or that you are fully aware of the amount of time you have to object, what the potential consequences of the decision are, and what steps you need to take to file the necessary paperwork.

PROS: The parties have the right to agree to an arbitrator, or a panel, on their own. This gives the parties some flexibility over who hears the case. A case must be heard and decided within a very short period of time so the parties can resolve the issues and save protracted litigation costs. The rules of evidence are relaxed and the parties rely mostly on the arguments of their counsel, rather than paying for extensive discovery and disclosure, hiring experts and scheduling witnesses for trial. Each party gets a clear idea of how the facts and evidence they choose to present will likely be decided and they can decide whether the case merits going further. If they decide to request a regular trial after arbitration, the judge will not know the decision of the arbitrator, or what evidence was presented. The case will be heard "de novo" or "from the beginning" as if the arbitration had not taken place.

CONS: If the parties do not agree on an arbitrator or panel, the court will assign the case and the parties will have no choice in who hears the case. The case is heard in a short period of time so preparation will be accelerated. If a party disagrees with the arbitrator's decision, and decides to have a trial "de novo" with the judge, the other party can request fees and costs of the trial, the arbitration, and other costs even if the party requesting the new trial wins. These fees and costs are set out in F.S. 44.1103(6).

• The court can ask the parties to consent in writing to binding arbitration. This means, essentially, the arbitrator's opinion will be adopted by the court as an order and court's order will be final. Notice the words "consent in writing."

 PROS:  The parties can choose their arbitrator or panel by agreement giving them some control over who hears the case. The rules and procedures are formalized. Filing an application for binding arbitration tolls the statute of limitations. The arbitrator or chief arbitrator of the panel, has subpoena power for production of documents and witnesses and other evidence. The time within which to complete the arbitration is fairly short so the case can be resolved much faster than traditional litigation permits. An appeal of the arbitration decision can be made to the Circuit Court.


CONS: If the parties do not agree on the arbitrator or panel, the judge will assign the arbitration at random. The time within which to conduct the arbitration is much shorter and this means less preparation time. The decision is final and binding and subject to immediate enforcement. Appeals are limited to specific issues of the arbitrator's failure to comply with rules and statutes and evidence codes, bias, partiality or misconduct, or a decision that violates state or federal constitutional principles.

• The parties can agree to voluntary trial resolution. This is essentially a complete trial in front of an arbitrator rather than a judge. This model is actually the traditional arbitration relied upon throughout history.

PROS: The trial resolution judge must have specific qualifications and must have been a member of the Florida Bar for at least 5 years in good standing. If the parties have a written agreement detailing how to choose a trial resolution judge, they will have some control over who hears the case. Filing the voluntary trial resolution application tolls the statute of limitations. The trial resolution judge has subpoena power for witnesses, documents and other evidence and may administer oaths or affirmations. The final decision of the trial resolution judge is enforceable by filing a petition for final judgment. The decision is appealable to the appropriate appellate court.

CONS: If the parties do not have a written agreement as to how to choose the trial resolution judge, the judge will appoint someone who meets the qualifications at random. There is no "de novo" review of the facts at any appellate level. The harmless error rule applies unless a constitutional issue is raised. This means that even if an error was made, if it would not have changed the outcome or did not substantially prejudice a party, the ruling will stand.

"Cap on fees?"

So, you ask, who pays for all this? The parties pay for it. However, most court ordered arbitration has a cap on fees. This does not include attorneys, experts, documents, transcription, reporting or other fees. Where a party cannot pay, state funds may, under some circumstances, be used to pay the arbitrator. Obviously a single arbitrator is much less expensive than a panel, but sometimes a panel will give you a better outcome. A trial resolution judge has more experience than many arbitrators, and the fees are usually the same. The flip side is that each circuit has its own rules, procedures and allowances.

Arbitration has been used successfully for hundreds, if not thousands of years. It is a valuable alternative and saves time and expenses for litigants in tough economic times and increasingly shrinking judicial resources. It is important to be informed, know your options, and find out about local arbitrators.

I hope this answers any questions you may have about court-ordered arbitration. Collaborative Solutions, P.A. is available for arbitration throughout Florida, and can be found on several judicial lists in central Florida.

I look forward to working with you.

Lyndy

* Florida Statutes prohibit arbitration in child custody, visitation or child support or where the rights of a third party not part of the arbitration are, or may be affected. For the full explanation you can read F.S. 44.104(14) HERE.