Goal
The purpose of court-sponsored arbitration is to provide parties with an adjudication that is earlier, faster, less formal and less expensive than trial. The award (a proposed judgment) in a non-binding arbitration may either:
- become the judgment in the case if all parties accept it, or
- serve as a starting point for settlement discussions
Process
At the election of the parties, either one arbitrator or a panel of three arbitrators presides at a hearing where the parties present evidence through documents, other exhibits and testimony. The application of the rules of evidence is relaxed somewhat in order to save time and money.
The process includes important, trial-like sources of discipline and creates good opportunities to assess the impact and credibility of key witnesses:
- parties may use subpoenas to compel witnesses to attend or present documents
- witnesses testify under oath, through direct and cross-examination
- the proceedings can be transcribed and testimony could, in some circumstances, be used later at trial for impeachment
Arbitrators apply the law to the facts of the case and issue a non-binding award on the merits. Arbitrators do not “split the difference” and do not conduct mediations or settlement negotiations.
Preservation of right to trial
Either party may reject the non-binding award and request a trial de novo before the assigned judge, who will not know the content of the arbitration award. If no such demand is filed within the prescribed time, the award becomes the final judgment of the court and is not subject to appellate review. There is no penalty for demanding a trial de novo or for failing to obtain a judgment at trial that is more favorable than the arbitration award. Rejecting an arbitration award will not delay the trial date.
Parties may stipulate in advance to waive their right to seek a trial de novo and thereby commit themselves to be bound by the arbitration award.
Read more…
http://www.cand.uscourts.gov/pages/87