SETTLING DISPUTES WITHOUT THE STATE
by
The traditional way of settling disputes of any substance is
through court proceedings. While many individuals still feel
that being sued -- and in some cases, suing -- carries a stigma,
most businessmen see the courtroom proceedings as nothing more
than a necessary, and usually extremely expensive, evil. The
result is that judges and juries, often totally unversed in the
subject matter of a civil suit, are hearing everything from
divorce cases to contractual controversies, to bodily damage
suits. Attorneys are grossly over-committed, court schedules
burgeoning with backlogged cases, judges harried, and jurors more
often than not reluctantly impaneled. As a result, the only
prognosis that a defendant and plaintiff can make with certainty
is that, regardless of the merits of a case, litigation will be
slow, costly, and often inequitable.
There is, however, an alternate method of settling legal
controversies and disputes. It is a considerably less expensive
method than the traditional court trial; it is a method that not
only has its roots in the common-law legal concept, but also has
statutory recognition internationally, and in the U.S. at both
the federal and state level, and most importantly, it is
effective. The method is arbitration.
The use of arbitration is not new. It was practiced by the
ancient Greeks and Romans, from whom we inherited many of our
legal concepts. Throughout American history it has either been
used or advocated. Abraham Lincoln, for example, advocated that
lawyers should try to keep their clients out of the courtroom,
and to illustrate the principle, he arbitrated a boundary dispute
between two farmers. The concept of arbitration is well
established in U.S. labor disputes; and a well-known U. S.
athlete was released from his contract through an arbiter's
decision.
U.S. state and federal statutes require that the courts
recognize arbiter's decisions, and arbitration has been
incorporated into international treaties. The statutes require
that awards under arbitration be given the force of court
judgments, and, if the rules of arbitration are adhered to (both
parties must agree to the arbiter's use, and must agree to abide
by his decision), the case cannot be re-examined on its merits or
on the basis upon which the arbiter reached his decision.
Businessmen are not the only ones who can benefit from
arbitration. Even though the no-fault divorce has done much to
remove the soap opera atmosphere from the divorce proceedings,
arbitration would be less expensive and equally effective,
particularly when substantial amounts of property are involved.
In principle, any kind of contract -- including separation
agreements, contracts of purchase and sale, leases, etc., may
contain a clause stipulating that disputes may be resolved
through arbitration. If a contract contains this clause, the use
of arbitration cannot be circumvented unless both parties
subsequently agree to it, and the courts will require that the
case be arbitrated rather than going to trial.
Another merit of arbitration is the privacy it allows. The
arbiter hears the case in the presence of the principals, with
judge, jury, spectators and/or newspaper reporters excluded.
Time-consuming legal maneuvers and issue-clouding rhetoric by
over-ambitious attorneys are eliminated, with the result that a
case in arbitration moves much more quickly to its conclusion.
Moreover, there will be no rules of court that could conceivably
keep relevant information out of the case, a fact which should do
much to assure equity.
Even if the original contract does not contain an
arbitration clause, it can be incorporated into the document upon
the agreement of the parties at a later date; and, even after
controversy has arisen, the principals may agree to arbitration
rather than going to court. As an advocate of arbitration has
said, "Even when the parties in a dispute can't agree on anything
else, the idea of arbitration may sound good to them."
Arbitration was criticized in early English history, because
it "ousted the courts of their jurisdiction." But today, any
businessman who has been to court has learned that most business
matters do not really belong under the jurisdiction of a court.
While business obligations and commitments accumulate at a steady
rate, the court grinds out decisions with mind-numbing slowness -
- especially in cases that require some expert knowledge in a
business matter. Most experts now agree with former United
States Chief Justice Harlan F. Stone, who said, "(business
disputes) can be better determined by an arbiter with training
and experience in a particular trade or business than by a judge
or jury who have not had that training and experience."
Arbitration is not a concept to simply be talked about and
pointed to as an idealistic but impractical dream, but is
currently a reality, in the form of the American Arbitration
Association, which has been in the business of arbitrating
disputes for more than 50 years. Recent AAA statistics show that
of 35,000 cases handled, 14,000 involved automobile accidents,
13,000 involved labor-management disputes, and 4,000 involved
contract disputes between businessmen. The AAA also handled
cases involving consumer problems, medical malpractice claims,
and family/personal disputes. Internationally, many chambers of
commerce have arbitration facilities for trade contracts.
Here's how the AAA operates, which is typical of most
arbitration bodies: It provides the parties in dispute with a
list of arbiters, from which each party may select arbiters of
his choice. Each party is given seven days to study the list,
eliminate unwanted names, and indicate preferences in the
remaining names, through a numbering system. If the parties
cannot thus agree on an arbiter, the AAA will submit them another
list. If the second list does not elicit a mutual choice, the
AAA will then appoint an arbiter -- being sure, however, not to
appoint one whose name was eliminated from the list. The parties
are then given the choice of being represented by a lawyer, or
proceeding without a lawyer (the officers of a corporation may
represent their company in arbitration, but may not do so in a
court trial).
The fees of the AAA for this service are a percentage of the
total amount in dispute, beginning at 3% for the first
$10,000.00, and declining as the amount increases. Stenographic
records of the arbitration will be kept only if requested by the
parties, who must then bear the cost of it. The arbiter will
render a written and signed decision, usually within 30 days.
The arbiter's decision is final and cannot be appealed.
While courts continue to be glutted with civil cases, and
experts mull ways of expediting the overburden of cases through
these halls of justice, arbitration as a fast and efficient
method of serving civil equity remains comparatively
unpublicized. But it is available, and can and should be used by
more people.
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