Arbitration is a more formalized process of alternative dispute resolution in which a neutral third party (or parties), known as the arbitrator(s), renders a decision after a hearing at which both parties in the dispute have an opportunity to be heard. Unlike litigation, arbitration dispenses with many aspects of formal court procedure, and often uses relaxed rules. Rather than a judge and jury, the dispute is assessed by one to three arbitrators. The arbitrators are often paid by the parties to the dispute.

At the hearing, each party can present proof and arguments. However, one disadvantage of arbitration is no discussion is facilitated between the parties. Unlike mediation, the decision is often supported by a reasoned opinion by the arbitrators.

Arbitration can be “binding” or “non-binding.” Binding arbitration means the parties have waived their right to a trial or appeal, and have agreed to accept the arbitrator’s decision as final and binding, with no right of appeal the decision. Non-binding arbitration means the parties can request a trial if they do not accept the arbitrator’s decision.

Arbitration frequently is triggered by a provision in a written contract or agreement between two or more parties—the arbitration clause—which generally states that any dispute arising under the contract is to be resolved via arbitration. The clause usually provides the location or identifies the process or procedures to be followed. For example, it can call for the procedures of the American Arbitration Association (“AAA”) or the Houston Maritime Arbitration Association (“HMAA”, of which I am a member) to apply. Often, the arbitration association selected will have it policies and procedures available on-line, for parties to read and be guided by.

While each case is different and may have unique circumstances that can change the usual procedures, arbitration conducted pursuant to AAA provisions, for example, usually proceeds through the following general stages:

The Case Initiation Stage:

The AAA sends out a letter or email notifying the parties that the case has been filed. This communication also provides information regarding the arbitration process. Dates for when the respondent should file an answer to the claimant’s Demand for Arbitration and for all parties to provide any other needed information will be set at this time as well. If any fees required from any party at this time, these also will be requested.

Arbitrator Invitation Stage:

Depending on what process is set forth in the rules that govern the arbitration, the AAA then invites an arbitrator or arbitrators to serve on the case.  As part of this process, the arbitrator(s) reviews the case information, checks for conflicts and returns a signed oath document, along with any relevant disclosures.

Arbitrator Appointment Stage:

At this stage, the parties are notified of the appointed arbitrator(s) and provided an opportunity to object to this arbitrator(s) serving on the case. A due date for any objections is set and if any objections are received, the AAA will conduct a process to decide if the arbitrator should be kept on or removed from the case. If the AAA decides to remove the arbitrator, the case returns to the arbitrator invitation stage, as previously described. If the arbitrator is kept on the case, the case continues to the next stage.

Preliminary Hearing and Information Exchange Stage:

After appointment and confirmation of the Arbitrator, the preliminary hearing conference call with the parties and the arbitrator is held. During this call, preliminary issues are addressed and a hearing date is set.  After the call is held, the Arbitrator will issue a written document called a “scheduling order”, which confirms all important dates and specifics discussed on the call.

Hearing Stage:

During this stage, the parties present their case to the arbitrator. This process can take place in person, over the telephone, or by the parties submitting written documents. The parties’ arbitration agreement and the applicable rules that govern the case will dictate the process. Sometimes, parties will also submit written arguments after the hearing at the direction of the arbitrator.

Award Stage:

After the hearing is completed and the arbitrator determines no more evidence will be presented, the hearing(s) is closed and a date for the issuance award is set. The arbitrator renders a written award which decides the outcome of the case and is sent to the parties. The Decision can be brief (a single page), a longer “reasoned” award (which explains the reasons for the decision), or even lengthy Finding of Fact, Conclusions, and how Damages are calculated. At this point the case is over.

The above is a summary of one or more news stories reviewed by the author of this article. It may contain comments or views of the author only.

This article is intended for general interest and does not constitute legal advice.

We at Herd Dispute Resolution, LLC, would be pleased to discuss this article, or how arbitration may help resolve your dispute. Please call us at 713-955-4299, or via email at


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