Arbitration is a form of alternative dispute resolution (ADR) managed by a neutral third-party. An arbitration hearing may involve the use of a single arbitrator or a tribunal. A tribunal typically consists of three arbitrators, but more may preside. The disputing parties cede their power to the arbitrator(s), who provide a final and binding ruling. This differs from the outcomes of mediation, negotiation and conciliation, which are non-binding.
In arbitration, the parties surrender to one or more neutrals control of their dispute, much as they would to a judge or jury at trial, but with three key benefits:
- Control of the selection of the rules for information exchange, for the time, place and procedure for the hearing of proof and argument, and for the binding effect, if any, of a final decision ultimately resolving the dispute.
- Scheduling flexibility.
- Where useful, selection of one or more neutrals to serve as arbitrator who have specialized knowledge or experience the parties judge would allow a fairer or more accurate resolution to their dispute.
The parties select one or more neutrals to hear their respective evidence and argument and to render a decision resolving all issues in dispute.
Single Arbitrator Arbitration
The parties to a single arbitrator arbitration vest in a single neutral to authority to enforce the rules agreed upon by the parties, to hear the parties’ proof and argument, and to render a final award fully and finally resolving the dispute.
Here the parties select a panel of three or more arbitrators to serve the functions described above for a single arbitrator. The panel members can either be chosen jointly by the parties, or the parties can each select one panel member (a “party arbitrator”), with the two party arbitrators choosing a third arbitrator to serve as the head or “umpire” of the panel.
Where the parties elect to stipulate in their agreed rules that the award of the arbitrator or panel is not binding on the parties, they follow the same procedure as any other arbitration and then choose to use the resulting award as merely an advisory ruling that can be used to inform the parties ‘efforts to reach a negotiated dispute resolution.
The parties may stipulate in their agreed rules that the award of the arbitrator or panel is binding, subject to any applicable state or federal law relating to the enforceability or appealability of arbitration awards.
Baseball arbitration, like high/low arbitration, creatively combines the finality features of binding arbitration with the control features of a negotiated dispute resolution. In this form of arbitration, the parties select a single arbitrator to hear their respective proof and argument and to receive from each party at the end of the hearing a sealed written dollar resolution amount. The arbitration award is then determined by the arbitrator’s review and selection of one or the other of the resolution amounts submitted.
Night Baseball Arbitration
As in baseball arbitration, in night baseball arbitration, the arbitrator, after hearing the parties’ respective proof and argument, receives from each of the parties a sealed confidential dollar resolution amount. However, before unsealing the parties’ amount submissions, the arbitrator renders an award ruling. The arbitrator then unseals the parties’ submissions and whichever of those is closest to the arbitrator’s ruling is entered as the binding arbitration award.
In high/law arbitration, the parties negotiate, perhaps with the assistance of a mediator, an agreed dollar range of acceptable binding arbitration awards in advance of the arbitration hearing and without notice to the arbitrator or panel. The parties agree that if the binding award returned at the end of the hearing by the arbitrator or panel is:
- higher than the agreed range, then the award will be adjusted down to the dollar figure at the top of the range.
- lower than the agreed range, then the award will be adjusted up to the dollar figure at the bottom of the range.
- anywhere in the agreed range, it will be binding as entered without adjustment.
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