What is arbitration?
Arbitration is a procedure, much like a trial but less formal. Instead of a decision being made by a judge or jury, an arbitrator hears the evidence and makes a decision. Like a judge, an arbitrator makes rulings on motions, decides the order in which witnesses appear and the testimony they give, and may impose penalties on a party who disobeys the arbitrator’s orders. Like a jury, an arbitrator, after hearing the evidence, decides which side wins and which side loses and what the result will be.
Some contracts, including some real estate, consumer and employment contracts, require that the parties arbitrate their disputes before or instead of taking their case to court. Some people choose to arbitrate rather than go to court because they can agree they want a quicker decision with less expense. Sometimes arbitration is required by the courts when someone files a case.
When is arbitration mandatory?
Oregon’s circuit courts require arbitration in two kinds of cases. The first kind is a civil lawsuit. A civil lawsuit is a case where one party, the plaintiff, is suing another person or corporation, the defendant, for money. Examples include a personal injury case from an automobile accident, a disagreement about a contract, or some other type of case that doesn’t involve criminal charges. In civil cases, the lawsuit goes into arbitration depending on the amount of money the plaintiff is asking for $50,000 or less, excluding court costs and attorney fees.
The second kind of case that goes into arbitration is a domestic relations or family law case, where the parties are arguing about something other than custody or support. An example is a case where the husband and wife cannot agree on how to divide their property and their debts. In some counties, the parties agree to arbitrate disagreements about support as well.
Local court rules may allow parties to choose mediation rather than arbitration if all sides agree.
Who is an arbitrator?
In the state court system, an arbitrator is a lawyer who has been admitted to practice for at least five years. The arbitrator is either chosen by the parties and their attorneys or selected by a judge or court clerk.
How does a case end up in arbitration?
The court orders a case into arbitration.
Court rules require that a party state in the title of a pleading whether or not the case is subject to mandatory arbitration. The case will automatically be referred to arbitration if the party does not state “CLAIM NOT SUBJECT TO MANDATORY ARBITRATION” in the title of the pleading, or a party does not otherwise file a special notice that the case is not subject to arbitration before it is assigned to arbitration.
A party seeking an exemption from arbitration must file and serve a motion for exemption within 14 days of the court’s notice that the case has been assigned to arbitration
Once the court assigns the case to arbitration, the court provides a list of arbitrators, and the parties can either select an arbitrator from the list or choose someone that both sides trust to make fair decisions.
What is the cost of arbitration?
The cost of arbitration is different in each county. However, each side typically pays half of the arbitration fee, which on average is usually around $150 per hour of the arbitrator’s time. Usually, the parties must send a deposit to the arbitrator when the arbitrator is selected, and the whole fee must be paid before the hearing. Most courts limit the total amount of the arbitrator’s fee, unless the case is so complicated or time-consuming that the arbitrator should be paid more. Usually, the party who loses the case must repay the other side for its share of the arbitration fee. Of course, each side must pay his or her own lawyer fees, and the arbitrator may, in certain types of cases, order the losing side to pay the winning side’s lawyer fees.
If either or both parties are unable to afford the cost of an arbitrator, a judge may waive the arbitrator’s fee, in which case the state pays the arbitrator. The judge also may defer the fees until the winner has been determined, and then the fees are paid by the losing party.
How does arbitration work?
Arbitration is a way to keep the cost of lawsuits down and shorten the time it takes for a case to get resolved. The arbitrator decides when motions and hearings are set. Generally, the case will have a hearing within 7 weeks from the day the arbitrator is chosen. Before the hearing, each side must give the arbitrator a list of the witnesses who will testify at the arbitration hearing and a description of any evidence that will be presented.
An arbitration hearing is more informal than a court proceeding, but the arbitrator is required to have witnesses swear that their testimony is true and allow the parties or their lawyers to ask questions and introduce evidence. The arbitrator may ask questions of the witnesses or require that the parties or their lawyers submit other evidence after the hearing. An arbitrator may also delay or continue a hearing to give each side a chance to get its entire case presented. Because the rules of evidence are less strict in arbitration than in a trial, the parties may be able to save the cost of paying witnesses, such as doctors and other experts, by submitting their written reports instead. Despite the relative informality of arbitration, parties should prepare their cases fully, just as they would for trial.
An arbitrator should issue a decision within 20 days after the hearing is finished.
Can an arbitrator decision be appealed?
In most cases, the decision of the arbitrator is either accepted by both sides, or both sides decide to settle the case. If either side does not want to accept the arbitrator’s decision, the case may go back before a judge or jury for a decision. A party wishing to appeal the arbitration award must do so within 20 days after the arbitration award is filed with the court, and must also pay $150 to the clerk of the court.
The case then goes to trial. The judge or the jury deciding the case does not know what the arbitrator decided. The party who ultimately loses the case may still be required to pay the winner’s share of the arbitration fees. If an appealing party does not get a better result in the judge or jury trial, that party will lose the $150 it paid to have the appeal and will be required to pay the reasonable attorney fees and costs of the other party incurred during the appeal.
Legal editor: Patricia Pascone, July 2018.