Resolving business disputes fairly often takes much longer than you might hope, and even when parties do reach an arbitrated agreement, one party may strongly disagree with the outcome. Settling business disputes through an arbitrator can be a welcome relief or it may produce even more complications for the parties at odds, if they do not approach the process wisely.
Arbitration provides individuals and businesses a way to settle disputes outside of a courtroom, while still delivering decisions that each party must abide by, legally speaking. If you face the task of settling a business dispute through arbitration, it is essential to prepare your team carefully for the process, before you even set foot in the venue. A little careful attention can save you significant headaches down the road.
Arbitration is serious business
Some parties make the mistake of assuming that arbitrated resolutions are flexible. This is generally not the case, and failing to execute the terms of an arbitrated agreement may result in stiff legal action that may significantly harm your business.
Appealing the decision of an arbitrator is not as easy you might assume, since it is not a ruling handed down by a judge. However, over the last several decades, courts have tended to side with the legal authority of arbitrators, making it very difficult to appeal arbitrated decisions after the fact.
If you do hope to overturn an arbitrator’s decision, you must usually identify some way in which the decision oversteps the boundaries of the arbitrator’s power to order remedies. If the arbitrator in question ordered a remedy that is beyond the scope of his or her authority, then a court may overturn the decision, but this is easier said than done.
Before you enter the arbitration process itself, take time to carefully review the contracts that lay out the scope of an arbitrator’s authority, to make sure that boundaries on that authority are sufficiently constrained. If the clauses in your arbitration contract lay out broad, vague authority for the arbitrator, consider amending the contract to place more well-defined limits to the remedies he or she may order. Otherwise, you may find yourself on the hook for remedies that seem well outside what you expected or believe is fair.
Your preparation is an essential component of your success
The way you prepare for arbitration may mean the difference between an acceptable outcome to your dispute and a devastating blow to your business. Always scrutinize the terms of any arbitration very carefully before you agree to the process with a specific arbitrator. The work you do prior to the arbitration itself may help you avoid an unacceptable outcome and preserve your business’s priorities.