Arbitration has become the preferred way for consumers and businesses to resolve legal disputes without going to court. Before the advent of modern arbitration, consumers and businesses were often locked out of our court system because of an inability to find affordable legal representation for smaller value disputes. In contrast, the simplicity and efficiency of arbitration provides all parties with fair and affordable access to civil justice. The benefits of arbitration have made it a vital element of the modern civil justice system. These benefits include:
Additional information:
Consumer outcomes in arbitration are the same as in court. Every published study and all empirical data indicate consumers prevail at a rate that is greater than or equal to litigation, where similar subject matter is at issue. It is important to note that evaluating arbitration outcomes is only meaningful in comparison with court outcomes of similar cases. In court and in arbitration, a large percentage of consumer respondents in contractual debt cases fail to respond or appear.
Consumers prefer arbitration over litigation. American consumers, lawyers and courts consistently and resoundingly acknowledge the benefits of arbitration (see Consumer Comments, Usage Surveys and Judicial Opinions). In his own words, former participant in a National Arbitration Forum arbitration proceeding Abuch Nwosu said, “I would most recommend the arbitration process for both friends and family in order to get a fair hearing and decision. I would like others to know my experience in order to create awareness of arbitration in this society where justice is sometimes prevented."
Arbitration is significantly less expensive than court. Filing fees for consumer claimants start at $25 for smaller claims. For larger claim amounts where a consumer party requests a participatory hearing, the fee schedule calls for the business party to pay the consumer party’s share of the hearing fee that exceeds $250. This maximum fee amount is less than the filing fee that a consumer plaintiff would be required to pay in many trial courts. In many cases, the FORUM’s simplified procedures enable individual parties to proceed without the need to engage and pay an attorney.
The National Arbitration Forum’s rules are flexible. One example of the flexibility is in the ability to elect the type of hearing that is most appropriate for any particular dispute. Parties can appear in person, by telephone or by documents. The availability of document hearings means consumers can save the expense of missing work and/or traveling. Document hearings can “level the playing field” for legally unsophisticated parties by eliminating situations where they are directly questioned by opposing lawyers. This leads to a lower pressure environment and makes arbitration more accessible for consumers.
The arbitration process is speedy. Analysis of the FORUM’s California consumer arbitration outcomes shows a median case duration of 4.35 months for arbitration claims brought by individuals against businesses and 5.60 months for arbitration claims brought by businesses against individuals. Court litigation durations for contract lawsuits in the largest 75 U.S. counties reported by the Bureau for Justice Statistics show a median duration of 19.4 months when individuals sue businesses in court and a median duration of 15 months when businesses sue individuals.
Arbitration saves taxpayers thousands of dollars per dispute. Review of New Jersey Judicial budget proves that New Jersey taxpayers save over $3,000 for each civil suit resolved through arbitration. A review by the Yuma County trial court in Arizona reached a similar conclusion.
Arbitration decisions made by the National Arbitration Forum are fair. All National Arbitration Forum decisions are made by independent and impartial arbitrators who are experienced legal experts. FORUM arbitrators are former judges or seasoned attorneys with at least 15 years of legal experience. Arbitrators subscribe to the highest standards of professional conduct and follow explicit rules to ensure that parties’ rights are protected and all ethical principles are upheld. Federal and state court opinions affirm this fact: “FORUM...is without question an inexpensive, efficient and convenient forum for resolving commercial disputes.” Provencher v. Dell, Inc., 409 F.Supp.2d 1196, 1198 (C.D. Cal. 2006).
The National Arbitration Forum’s independent case administration and neutral decision makers constitute a system that, along with judicial oversight as dictated by the Federal Arbitration Act, clearly satisfies or exceeds objective standards of fairness, including those provided by governing laws, public rules, and accepted due process procedures.
FORUM arbitrators have sufficient time to consider and decide cases. An arbitrator does not face an overcrowded docket of hundreds of cases of varying types that judges often have to review. FORUM arbitrators have sufficient time to thoroughly review each case to determine which party should prevail under the applicable law, and arbitrators will make extra time available when necessary. A judge simply may not have sufficient time or staff to do what an arbitrator can properly do in handling case dockets. An important distinction between FORUM arbitration and court is that in cases where one party does not respond to an arbitration claim, the arbitrator must review the evidence presented before issuing the award. Unlike in court, no “default” decisions are issued against the non-participating party.
Some summary reports suggest that FORUM arbitrators decide numerous cases on the same day. This is an artifact of how the awards are administratively processed. The date of an arbitration award indicates the date it was entered into the FORUM database. Therefore, an arbitrator may issue a series of awards over several days, but those awards are often bundled for delivery to the FORUM and thus “entered” on a single day.
Arbitration decisions are legally enforceable. All arbitration decisions are approved by a judge before becoming a legally enforceable judgment. Moreover, every arbitration award issued by a National Arbitration Forum arbitrator can be reviewed by a judge to determine if the procedures used, the hearing conducted, and the award issued were fair and just under the applicable law. A losing party has the right under the law to challenge or seek to vacate an arbitration award before a judge. A winning party has right to seek to confirm an arbitration award into a civil judgment. The availability of these judicial proceedings further guarantees that arbitrations, including FORUM arbitrations, are fair and just.
The system works. Judges review arbitration awards to make sure they are fair. The vast majority of the time judges confirm the arbitration awards they review. Those few cases that involve judges vacating awards prove that the current system works quite well. Federal and state arbitration law permits judges to reverse an arbitrator if proceedings have not been for or when a significant error is made. And so, losing parties to arbitration can seek relief from a court. Those reported cases of consumers having an award against them vacated are compelling evidence that our current system results in justice being done. Our current civil justice system is a partnership between arbitrators and judges. The courts review the arbitration rules ahead of time to make sure they are fair; and the courts review arbitration awards to make they are just. This partnership provides all parties with just results.
Resources:
Arbitration – A Good Deal for Consumers: A Response to Public Citizen
(Professor Peter B. Rutledge, April 2008)
Company Fact Sheet
The FORUM’s history, focus areas, programs, and industry.
Consumer Comments about the FORUM
What FORUM users say about their experience with arbitration.
Judicial Opinions Supporting Arbitration
What the courts say about arbitration.
What Arbitration Means (For Consumers and Employees)
The benefits arbitration offers consumers and employees.
Articles:
ABA Statement on Public Citizen’s Arbitration Report
Edward Yingling (September 27, 2007)
Arbitration: Fair for Consumers
Roger Haydock, Forbes.com (October 31, 2007)
Arbitration urged for complaints
Patrick Danner, Miami Herald (March 2, 2008)
The Arbitrator’s Case Against Litigation
Roger Haydock, Star Tribune (November 12, 2007)
Behind Those "Unfair Arbitration" Numbers
Walter Olson, Overlawyered (October 18, 2007)
Bogus Attack on Arbitration Really about Plaintiffs’ Lawyers’ Right to Sue
U.S. Chamber Institute for Legal Reform (September 27, 2007)
Bills Aim to Get Consumers their Day in Court
Richard Simon, LA Times, (December 17, 2007)
Consumer and Employee Win Rates in Arbitration
Ted Frank, Overlawyered (December 16, 2007
Debtor’s Hell: A Court System Compromised
A Boston Globe spotlight on the truth of debt disputes in court.
Defaults on Loans Surge in Minnesota
Randy Furst, Star Tribune (February 23, 2008)
Key to Credit Card Disputes is to Respond, Experts Say
D. Ashley Verrill, North Bay Business Journal (October 29, 2007)
Limits on Arbitration Would Burden Courts and Taxpayers
Mark Fellows, Metropolitan Corporate Counsel (December 2007)
Party at Ralph’s
Wall Street Journal (November 7, 2007)
Preserving The Validity Of Agreements To Arbitrate: The Need For Mutuality In Business-to-Consumer Transactions
Stacie M. Otte, Metropolitan Corporate Counsel (October 2006)
The Same Results as in Court, More Efficiently: Comparing Arbitration and Court Litigation Outcomes
Mark Fellows, Metropolitan Corporate Counsel (July 2006)
Selecting And Removing Arbitrators: Balancing Procedural Flexibility And Fairness
Ryan Chandlee, Metropolitan Corporate Counsel (December 2006)
Unpaid Credit-Card Bills Giving Rise to Lawsuits
Teresa Mcusic, Fort Worth Star-Telegram (August 31, 2007)
Analyses:
Superior Court of Arizona in Yuma County Performance Measures
Taxpayer Savings Analysis Sample – State of New Jersey
Studies:
ADR Preference and Usage Report (in collaboration with General Practice Solo and Small Firm Division [GPSolo] of the American Bar Association)
(National Arbitration Forum, 2006; data collected by Surveys and Ballots, Inc.).
ADR Preference and Usage Survey (in collaboration with Tort Trial and Insurance Practice Section [TIPS] of the American Bar Association)
(National Arbitration Forum, 2006; data collected by Surveys and Ballots, Inc.).
Arbitration: Simpler, Cheaper, and Faster Than Litigation
(Harris Interactive, 2005).
Debt Weight: The Consumer Credit Crisis in New York City and its Impact on the Working Poor (8.68 MB file)
An Urban Justice Center study on the truth of debt disputes in court.
Key Findings from a National Survey of Likely Voters
(Public Opinion Strategies and Benenson Strategy Group, December 2007)
Legal Dispute Study: Institute for Advanced Dispute Resolution
(RoperASW, 2003).
Outcomes of Arbitration: An Empirical Study of Consumer Lending Cases
(Ernst & Young, 2005).
The Case for Pre-Dispute Arbitration Agreements: Effective and Affordable Access to Justice For Consumers, Empirical Studies and Survey Results
(Various sources, 2004).
Consumers in Trouble: A Study of Debtors in Default
(David Caplovitz, 1974)
A classic study from the late 1960's revealed that in collection cases brought in court against New York City consumers, the consumer lost 99% of the time. Consumers in Chicago and Detroit fared slightly better, losing 96% of the time.
Default Judgments Against Consumers: Has the System Failed?,
(Sterling & Schrag, 1990; 67 Denv. U. L. Rev. 357, 360-61)
A Georgetown University law professor analyzed a sample of claims filed in 1988 against consumers in the Small Claims and Conciliation Branch of the Superior Court of the District of Columbia. The small claims procedure did not require the consumer to submit a written answer. Instead, the consumer only had to show up in court at the specified time. Nevertheless, according to the study, 74% of the cases resulted in a default judgment. In 22% of the cases, the consumer acceded to full liability. In the remaining 4%, the plaintiff voluntarily dismissed the case. None of the cases resulted in a trial.
About the National Arbitration Forum
The National Arbitration Forum (FORUM) is a world leader in dispute resolution. The FORUM provides fair, affordable, and accessible civil justice to all through recruitment, selection and management of a highly experienced and distinguished panel of over 1,600 former judges and seasoned lawyers. Expert FORUM arbitrators and mediators apply reasonable rules and substantive law to resolve disputes. The FORUM is the faster, lower cost and superior alternative to litigation, that ensures parties receive the same outcomes they would in court. www.adrforum.com
Media Contact
Christina Doucet
media@adrforum.com
952-516-6486
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