Arbitration is a binding form of dispute resolution, an alternative to litigation, where evidentiary hearings occur – and sworn testimony is offered – in meeting rooms not courtrooms. Contact the Chicago arbitration Lawyers at Baker Law Group today!
Arbitration Lawyers in Chicago
Arbitration is a form of ‘binding’ dispute resolution, in Chicago. Like judges, arbitrators are empowered to ultimately determine who ‘wins’ and ‘loses’ a dispute. Arbitrators convene hearings, take live evidence and testimony from witnesses, and enter arbitration awards to determine the outcome of the dispute. Final arbitration awards can be quickly converted into court judgments, which makes arbitrators’ decisions binding on the parties. Arbitration is an alternative to court litigation. These ‘binding’ processes are used when informal settlement negotiations, or ‘non-binding’ forms of ADR like mediation and step negotiation, fail to resolve disputes.
Advantages of Hiring a Chicago Arbitration Lawyer
Arbitration has its flaws, but enjoys many advantages over litigation. Arbitrators are often seasoned construction lawyers. They are familiar with industry norms, and often know more about design and construction law and practice than judges. Arbitrators often produce ‘better’ substantive decisions than judges – at least in the world of design and construction law.
Arbitration has other advantages. It can be quicker and more cost-efficient than court litigation. Arbitration awards are more final than judge and jury decisions, which can be more easily appealed on the merits. Also, while court filings are publicly available – and often embarrass the litigants – arbitration is conducted mostly in private.
Legitimate Criticism of Arbitration Mediators in Chicago
Arbitration was once the darling of the construction industry – with parties intentionally sacrificing the safeguards of litigation, and its expensive and inefficient procedures, in favor of more quick and cost-efficient dispute resolution.
Arbitration has now fallen into disfavor with many. Its critics complain about a perceived lack of due process, and that courts are seldom willing to reverse arbitration awards on appeal. They complain that its advantages, like quick and efficient cost resolution, can be lost when the process is seized by lawyers who treat it like their ‘scorched earth’ courtroom trial practice.
The issue is complex, but the critics are not entirely wrong. To experienced attorneys, the notion that design and construction arbitration is failing its users – at least partially – is not that controversial.
Given its advantages, Jeremy often selects arbitration as the ‘binding’ form of dispute resolution when preparing contracts. Rather than abandon arbitration, the legal industry should continue to work to improve it. Arbitration is a important alternative to litigation, which is at least equally flawed.
Advocating to Improve Arbitration
Jeremy’s arbitration-related writings include:
- Arbitrator-Directed Arbitration: A Proposal to Improve Arbitration, Construction Law Newsletter, Volume 35, Number 5 (May 2019)
- Chapter 20 – Arbitration, Construction Dispute Litigation 2018 Edition, IICLE (Mar. 2018)
- Chapter 19 – Nonbinding Alternatives to Court Litigation for Resolving Construction Disputes, Construction Dispute Litigation 2018 Edition, IICLE (Mar. 2018)
- Chapter 13 – Alternative Dispute Resolution Terms in Construction Contracts, Construction Law: Transactional Considerations 2017 Edition, IICLE (2017)
- Negotiating Dispute Resolution Clauses, Five Keys for Negotiating Business Contracts, IICLE Webinar (Mar. 21, 2014)
Do All Parties Have to Agree to Arbitration?
Yes. Arbitration is a voluntary process, meaning that all sides must agree to arbitrate their dispute. When a party argues that it wrongfully faces either arbitration or litigation claims, the Illinois Uniform Arbitration Act, 710 ILCS 5/2 (“Proceedings to compel or stay arbitration”), and the Federal Arbitration Act, 9 U.S.C. §3 (“Stay of proceedings”), §4 (“Failure to arbitrate under agreement”) empower courts to compel or stay arbitration proceedings, or to stay court proceedings pending the outcome of arbitration proceedings.
This is because arbitration is governed by the agreement of the disputing parties. Whether a dispute is subject to arbitration depends on the parties’ arbitration agreement. Parties who execute a contract containing a valid arbitration clause are irrevocably committed to arbitrate all disputes clearly arising under the agreement. Parties may mutually agree to waive an arbitration agreement and use litigation to resolve a dispute. However, if one party to a valid arbitration agreement wishes to arbitrate a dispute that falls within the agreement’s scope, courts must stay litigation and compel arbitration, even over the other party’s objection.
If the parties have no valid agreement to arbitrate, or if a dispute falls outside of an arbitration agreement’s scope, a motion to compel arbitration may be denied on the grounds that the dispute is not “arbitrable.” A court may vacate an arbitration award if it determines that an arbitration was wrongfully allowed to proceed.
What is the Contract Arbitration Process?
The arbitration process is flexible, so the steps depend largely on what the parties and the arbitrators agree to, but in general, an arbitration consists of the following steps:
- One party (the claimant) submits a written arbitration request, which details their claim.
- The other party (the respondent) submits a written response that details their position on the dispute.
- Arbitrators, who are usually seasoned construction lawyers, are appointed to resolve the dispute.
During arbitration sessions, each party (usually through their attorney) presents their argument and evidence to support it. After hearing both sides, the arbitrator(s) will make a decision, followed by an award. Any agreement to arbitrate in this state gives Illinois courts the jurisdiction to enforce any award.
How is Arbitration Different From Mediation?
Mediation is a form of alternative dispute resolution or ADR. ADR encompasses various dispute resolution methods that are non-binding, meaning that the outcomes are not enforceable.
With mediation, an appointed mediator helps the parties work together and resolve the dispute themselves. Unlike an arbitrator, who has the authority to impose an outcome, a mediator’s role is strictly for guidance.
Does Arbitration Have to Be In-Person?
If a disputed amount is less than $10,000, the parties may opt for an expedited proceeding that the American Arbitration Association calls ‘desk arbitration.’ No hearing is required in this instance: the arbitrator(s) will use submitted paperwork to reach a decision.
Can an Award be Appealed?
In general, it is extremely difficult to appeal an award. Appeals are usually made only when proper legal processes are not followed during the arbitration. (For example, one party did not have the chance to present an argument.) This is one of the perceived advantages of arbitration: there is more certainty in the outcome.
Jeremy uses arbitration and litigation to resolve disputes, depending on the case. Design and construction industry clients find themselves before judges and arbitrators. Their counsel must be adept in both forms of binding dispute resolution.
Jeremy has over a decade of experience prosecuting and defending claims in many American Arbitration Association (AAA) hearings, and has won favorable arbitration awards after AAA evidentiary hearings.
To learn more, contact Baker Law today.
