Arbitration is private and less formal than a court trial. But, arbitration is still just like court in that, by not reaching an agreement, you agree to tender the decision to a neutral third party. In arbitration, a neutral attorney called the “arbitrator” makes a decision based on the evidence presented by both sides. The arbitrator serves as a private judge, hearing evidence and testimony in a private office setting. Lawyers are allowed for either party. Upon conclusion of the presentation of all evidence, the arbitrator then prepares a written decision and sends it to both parties and the Court. The court’s ADR program may offer binding arbitration with a neutral serving as a temporary judge. “Binding” means there is no right to appeal and the parties must accept the arbitrator’s decision as final.
Arizona became the 14th W state (including the District of Columbia) to adopt the Revised Uniform Arbitration Act, which was adopted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) in 2000. Arizona substantially enacted the UAA in 1962. However, if parties reach an agreement to arbitrate but the agreement does not say which arbitration law will apply, then the default is the Federal Arbitration Act (“FAA”), which was written into law in 1925. This is the “default” arbitration that will apply to arbitration agreements unless the arbitration agreement spells out which arbitration law applies.
Arizona is different from other jurisdictions that have adopted the RUAA because Arizona maintains its old statute under the Uniform Arbitration Act (“UAA”) for cases involving employment, insurance, banking and securities. The RUAA will govern all other disputes. As you can see, arbitration can become incredibly intricate. If you think arbitration is right for you, several attorneys act as an arbitrator by agreement. However, if you choose to work with a private lawyer, you will be paying the private lawyer’s hourly rates to handle your dispute.
There is case law all over the United States that says arbitration is binding. Typically, the only way to undo the decision of arbitration is to prove that fraud or undue influence occurred at the arbitration. Fraud is very hard to prove. Also, there is a strong public policy interest in abiding by the outcome of arbitration.