Arbitration is often seen as a faster, more private, and sometimes cheaper alternative to traditional litigation.
However, anyone who has gone through the process will tell you that success in arbitration doesn’t come from showing up unprepared. It requires careful planning at every stage.
This guide walks through the key phases of arbitration, from filing the claim to selecting an arbitrator, preparing for hearings, managing discovery, and presenting your case effectively.
Starting the Process: Filing and Initiation
The first step in arbitration is usually dictated by the contract.
Elizabeth Shampnoi of Shampnoi Dispute Resolution & Management Services, Inc. explains that in order to proceed with arbitration, the parties must either have a contract that requires disputes to be resolved that way, or both sides must agree after the dispute arises to submit it to arbitration.
This initial agreement is crucial. Without a valid arbitration clause or mutual agreement, you can’t simply file for arbitration as you would in court. For businesses, this underscores the importance of carefully drafting contracts on the front end. Vague or poorly written arbitration clauses can create costly disputes over whether the matter should even be heard in arbitration at all.
Administered vs Ad Hoc Arbitration
Once the decision to arbitrate has been made, a second critical issue arises: who will administer the case?
Parties can either have their arbitration managed by an organization like the American Arbitration Association, or they can handle it ‘ad hoc,’ meaning they approach an arbitrator directly and rely on that person to run the entire process from beginning to end.
Leslie Berkoff of Moritt Hock & Hamroff LLP strongly advises against going ad hoc, highlighting several concerns:
- Arbitrators are limited in how they can interact with parties, so you need an administrative ‘buffer.’ Without an administrator, the arbitrator may end up handling billing and fee disputes directly.
- Case managers can guide parties on procedural or disclosure issues, something arbitrators cannot do.
- Institutions can step in quickly with emergency arbitrators if the situation requires it.
- Having a structured process ensures consistency and supports limited appeal rights.
While some businesses may worry about the fees, avoiding an administrator rarely saves money. Instead, it shifts administrative tasks to the arbitrator at higher hourly rates.
Institutions like AAA or JAMS don’t just provide infrastructure; they also offer safeguards around neutrality, billing, and even emergency relief if needed. Attempts to create free-floating ‘ad hoc’ rules ignore the practical reality that without an established institution, disputes often end up back in court because there’s no system in place to enforce or guide the process.
The Importance of Arbitrator Selection
Choosing the right arbitrator is arguably the most consequential decision in the entire process.
Jeffrey Zaino of the American Arbitration Association stresses that the outcome of a case can hinge on the arbitrator, so careful research and discussion at this stage is essential.
Zaino advises that parties may want to consider the following when selecting an arbitrator:
- Industry expertise usually outweighs pedigree or cost: Parties and their attorneys often want someone who understands the business context, such as an arbitrator with experience in insurance, construction, or finance, rather than focusing only on the arbitrator’s firm background or hourly rate.
- Former judges are sometimes selected: Clients may see judges as authoritative, but Zaino noted that subject-matter expertise often proves more valuable than judicial credentials alone.
- Three-arbitrator panels can add cost and time: While a panel may bring broader experience to complex disputes, it can be several times more expensive and may extend the process timeline compared to using a single arbitrator.
It’s important for attorneys to include clients in the arbitrator selection process. Giving them a voice in the decision helps build trust and minimizes the risk of second-guessing or dissatisfaction later.
Arbitrator selection isn’t just a box to check. It’s about finding someone with the right expertise for your case. That might mean an attorney with experience in financial services, an engineer in a construction dispute, or a former judge for complex commercial matters.
The Preliminary Hearing: Setting the Roadmap
After filing and arbitrator selection, the preliminary hearing sets the roadmap for the case. Arbitrators and counsel establish the schedule, define discovery limits, and identify motions that may be filed.
Byeongsook Seo of Snell & Wilmer suggests treating a preliminary arbitration hearing much like a scheduling conference in federal court, approaching it with the same level of seriousness and preparation. Building credibility with both the arbitrator and the process is essential, and that professionalism carries real weight in arbitration just as it does in litigation.
Carefully think through the format and schedule of the case. This means being realistic about the timeline and deciding early on whether the dispute should be resolved on the documents alone or through a full hearing. The key is to plan ahead and make deliberate, thoughtful choices rather than leaving these issues to chance.
Discovery and Motion Practice
Discovery in arbitration is generally narrower than discovery in litigation, a feature designed to keep costs and timelines under control.
Parties should take a practical approach to discovery in arbitration. Unlike in court, the process isn’t designed for endless depositions or sweeping document demands. Focus on what is truly necessary to prove or defend your case, rather than using discovery as a tactic to overwhelm the other side.
In the same vein, think carefully before requesting interrogatories. In many arbitrations, they add little value and can quickly become a costly exercise in posturing rather than a tool for uncovering useful information.
Motion practice also arises during arbitration, giving parties the opportunity to request rulings on key procedural or substantive issues before the case reaches a full hearing. Challenges to arbitrability, motions to dismiss, or requests for summary disposition can streamline proceedings if used wisely. Courts have limited tolerance for reviewing arbitration decisions, so strategic motion practice within the arbitration itself can be critical.
The Hearing and the Award
When the case proceeds to a full hearing, preparation is key. Unlike litigation, there is no jury in arbitration. Arbitrators both manage the procedure and render the award. This means advocacy must be clear and precise, balancing storytelling with evidence.
Hearings themselves can sometimes be more structured than parties expect. In complex cases, arbitrators sometimes issue guidelines covering practical points such as:
- How testimony will be presented.
- Whether witnesses will be sequestered.
- How exhibits should be marked and exchanged.
- Whether a ‘chess clock’ will be used to allocate time evenly between parties.
Another important choice concerns the type of award. Options typically include:
- Basic award: Simply states who wins and loses.
- Concise award: Adds a brief explanation of the decision.
- Reasoned award: Provides detailed findings and analysis, sometimes dozens of pages long.
Concise awards are common, but in complicated disputes, parties may request a full reasoned decision. While more costly, these provide transparency and may help identify issues for appeal. By contrast, a simple award offers fewer grounds for challenge and greater finality.
Costs also matter at this stage. If one party fails to pay its share of the arbitration fees, the other may step in to cover the shortfall to ensure the hearing proceeds and a judgment is issued that can be enforced in court. Institutions like the AAA have procedures in place to manage these situations, which is another reason why administered arbitration often runs more smoothly than ad hoc proceedings.
Why Preparation Matters
Arbitration is not just ‘litigation lite.’ It is a different animal altogether, with its own rules, costs, and strategic choices. Businesses that treat it casually, whether by filing bare-bones demands, skimping on arbitrator research, or walking into preliminary hearings unprepared, risk undermining their own case before it begins.
At its best, arbitration delivers what it promises: efficiency, privacy, and expertise. However, that only happens when parties prepare deliberately. From drafting airtight arbitration clauses, to selecting the right arbitrator, to making smart choices about discovery and motion practice, preparation is everything.
This article was originally published here.