Arbitration, Part 3 -- Right of Appeal

Binding arbitration is designed to be a quick and final extrajudicial disolution to disputes. However, experience has shown that this forced expediency often sacrifices accuracy and correctness.

Typically, binding arbitration does not allow for a right of appeal--either through an appellate arbitration panel or through judicial appeal. This means that the entire dispute will be decided by one individual.

In Court, though the process is admittedly often too long, too expensive, and too arbitrary, one benefit is that the judicial procedure provides for sufficient checks and balances that will prevent many egregious judicial errors. If the judge inappropriately dismisses a case before trial, the courts of appeal will typically reverse the trial court's decision and remand (send) the case back to the trial level.

If the trial judge makes an error of law in his ruling, the appellate courts will likely catch this error and reverse it. Furthermore, most, if not all state courts (and the federal courts) provide for additional layers of appellate oversite such that there are appellate courts to which you can appeal the decisions of other appellate courts.

All of these layers of judicial oversite create a heavy cost to taxpayers and to the individual litigant. However, of all the criticisms of the judicial system, one that you rarely hear is that, at the end of the day, after all appeals are through, that the courts got it wrong.

In the Arbitration proceeding, however, if a party is unhappy with the Arbitrator's decisions, there is little recourse. The aggrieved party will not be able to seek further redress within the Arbitration procedure. Furthermore, the party will not have access to the courts either. Typically, the role of the courts is limited to (1) enforcing an arbitration award into an official enforceable judgment or (2) to set aside arbitration awards in only the most egregious circumstances (i.e., beyond just mere errors of law and erroneous rulings).

This means that your entire case is in the hands of one arbitrator, sometimes not even an individual trained in the law, who holds your interest in the palms of his hand, secure further in the knowledge that--whatever he does--he likely will not be overturned.

Therefore, before entering into an agreement for binding arbitration, decide whether accurate and correct rulings should be sacrificed to the potentially arbitrary and unappealable ruling of an arbitrator.