Alternative Dispute Resolution: New York Arbitration Basics

NY Arbitration Law, NY Business Law

Many New York small businesses are turning to alternative means of dispute resolution, like binding and non-binding arbitration, so it is important to understand the basics of arbitration.

Arbitration is an out-of-court proceeding where parties contract to have a third party neutral, called an arbitrator, hear evidence and then make a decision. Often, parties to a contract agree to arbitration when they sign an agreement, which outlines the location of the arbitration and apportionment of fees.

Arbitration can be binding, which means that the parties must follow the arbitrator’s decision, or non-binding, which means that either party may reject the arbitrator’s decision and go to court as if the arbitration never took place.

Arbitration can be voluntary, where the parties agree to arbitrate, or required by law. It is quite common for parties to a contract to agree to an arbitration clause for disputes arising out of and related to the subject matter of the contract.

Arbitration comes with certain advantages to New York businesses.  It is usually a faster, simpler process that is easier to schedule than litigation and takes less time.  It is also a private proceedings in a setting outside of the public eye of the courtroom. Finally, if the dispute is technical in nature, parties can find an arbitrator with the requisite technical knowledge needed to decide the dispute.

However, there are some disadvantages to arbitration.  For example, you have only one chance to win, as a binding arbitration ruling cannot be appealed.  Setting aside an arbitration decision in New York is difficult because you would need to prove that the arbitrator was biased or that the arbitrator’s decision violates public policy.  Also, arbitrations often have their own rules of discovery that limit what parties can access. Finally, the costs of arbitration can be significantly higher than court filing fees.

Whether your New York small business wishes to pursue arbitration as an alternative to courtroom proceedings or not, you should consider hiring an attorney with knowledge and experience in both arenas.
*Gene Berardelli may be contacted at:

Gene is a New York street-smart attorney with an extreme passion for success. Gene specializes in litigation, arbitration and general corporate law for New York-based and international clients. He, also, is the host of a popular New York talk radio program.

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