Arbitration Facts

 

What is Arbitration?
Arbitration involves a neutral third party (arbitrator) who listens to the parties argue the merits of their dispute. The arbitrator imposes a final and binding decision, enforceable in a court of law. Generally, arbitration is less formal than litigation. The arbitrator conducts a full hearing at which witnesses present testimony and evidence and are subject to cross examination. Within a designated time, usually thirty (30) days, the arbitrator renders a written decision and an award. There are very narrow, limited grounds for reversing an arbitration award in court.

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What is Mediation?
Mediation involves an impartial third party who has no decision making power. The mediator attempts to assist and persuade the contesting parties to reach a mutual agreement and settlement of their dispute. The process typically begins with a joint session of all the parties. Brief presentations are made by both parties. The parties then meet separately and the mediator uses powers of persuasion to define the issues and realistically and candidly discuss the strengths and weaknesses of each party’s position and the likelihood of success or failure as well as possible means of resolution.

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What Is the Federal Arbitration Act?
The Federal Arbitration Act was enacted to reverse a long-standing judicial hostility to arbitration agreements and it expresses a liberal federal policy favoring arbitration agreements. The Act makes enforceable a “Written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of each contract or transaction. . . .” 9 U.S.C. § 2.

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Where does Arbitration apply?
Arbitration can be applied to employee, customer, client and contractual disputes. Any civil dispute that can be litigated, arbitration can apply (no criminal matter).

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What About Arbitration of Workplace Disputes?
Since the U. S. Supreme Court’s decisions in Gilmer v. Interstate/Johnson Lane Corporation (1991), and Circuit City v Adams (2001) the use of arbitration to resolve workplace disputes has come into wide use. The Court has affirmed the right of employers to adopt arbitration procedures for the resolution of all workplace related disputes.

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Does the Federal Arbitration Act Apply to Workplace Injuries?
Yes. The Texas Supreme Court has affirmed the applicability of arbitration procedures to all workplace related disputes. Further, the Federal Arbitration Act makes no exclusion for workplace injuries and would preempt the law of any state that might not agree.

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Does the Federal Arbitration Act Apply to All Employees?
Yes, except for those employees personally engaged in interstate commerce (i.e., railroad employees, drivers who transport goods across state lines, airline crews, etc.), all employees are subject to arbitration.

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What are the Advantages of Arbitration?
There are several strong reasons to prefer final and binding arbitration over litigation, such as:

  • Private and Confidential – Arbitration proceedings are generally conducted in private and the arbitrator’s award may be treated as confidential.
  • The Arbitrator is an experienced professional with expertise in the areas of the law particular to the case matter.
  • Faster.
  • Less expensive.
  • Final – Unlike litigation where appeals are often routine, arbitration tends to be final.

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Does A Party Waive Their Legal Rights?
No. The U. S. Supreme Court has specifically said that,
“By agreeing to arbitrate a statutory claim, a party does not forego the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.”

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Can a Company Implement a Dispute Resolution Plan to Cover Existing Employees?
Yes. According to the U. S. Supreme Court in Circuit City v Adams, employers can implement a Dispute Resolution Plan to cover existing employees.

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Can a Dispute Resolution Plan be a Condition of Employment?
Yes. The U. S. Supreme Court has ruled that when properly implemented, a Dispute Resolution Plan can be a condition of employment.

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Does the Employee Have to Obtain an Attorney?
No, and neither does the employer. A dispute resolution policy can provide that if the employee chooses not to be represented by an attorney, then the employer also agrees not to be represented by an attorney. This would not, however, preclude either party from seeking legal advice.

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Questions about Alternative Dispute Resolution? Call DSI today toll free at 1.888.DSI.3737 for more information!