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Arbitration Basics in Arizona

Arbitration is becoming more common nowadays, yet most people still don’t understand what it is or how it works. If you’ve heard the term used in the context of legal issues, you’re not alone. Arbitration is an alternative resolution to going to court in Arizona, and it has its pros and cons. 

What Is Arbitration?

Arbitration is a process where two parties in a dispute agree to resolve their issue outside of the traditional court system. Instead of a judge, the case is heard by an arbitrator (or a panel of arbitrators) who:

  • Listens to both sides
  • Reviews the evidence
  • Makes a decision

This decision can be either binding or non-binding, depending on what the parties agree upon beforehand.

In Arizona, arbitration has been around for decades and is used in a variety of legal situations. One of the most common places people encounter arbitration is in contracts. Thus, if an “arbitration clause” is included, any disputes must go through arbitration instead of court. For example, if you sign a lease, employment agreement, or even a cell phone contract, there might be a clause. So, if something goes wrong, you can’t sue in court—you have to arbitrate the dispute.

How Does Arbitration Work?

In Arizona (and most places in the U.S.), it starts with both parties agreeing to go through arbitration, either voluntarily or as required by their contract. Once arbitration is chosen, the next step is selecting an arbitrator. The arbitrator is a neutral third party. It is often someone with legal experience or expertise in the area of the dispute, such as real estate or labor law.

The arbitration process is similar to a trial, but less formal. Both parties get to present their arguments, offer evidence, and call witnesses. However, unlike in a court trial, there are usually no strict rules of evidence or courtroom procedures. This makes the process quicker and more flexible. Once both sides have made their case, the arbitrator makes a decision.

If the arbitration is binding, this decision is final and can’t be appealed. Therefore, the parties must follow through with whatever the arbitrator decides. In non-binding arbitration, however, if one of the parties doesn’t like the outcome, they can still take the matter to court.

In Arizona, there are also mandatory arbitration programs in place for certain types of smaller civil disputes. For instance, in Maricopa County, cases involving claims under $50,000 are automatically sent to arbitration instead of a court trial, unless one of the parties requests otherwise. This is part of an effort to reduce the burden on the court system and resolve disputes more efficiently.

Why Choose Arbitration?

There are several reasons why someone might choose arbitration over going to court. For one, arbitration is usually much faster. Court cases can take months or even years to resolve, while arbitration typically wraps up in a matter of weeks or months. Because arbitration is less formal, it can also be cheaper. You don’t need to go through all the lengthy procedural steps that a court case requires, and that can save on legal fees.

Arbitration is also private. This can be a big benefit for parties who don’t want their dispute aired in a public courtroom. Court cases are typically part of the public record, meaning anyone can access the details of the case. Arbitration, on the other hand, is confidential, and the results usually aren’t disclosed to anyone outside the parties involved.

Another key factor is the ability to choose your arbitrator. In court, you don’t get to pick your judge, but in arbitration, both sides often have a say in selecting someone who has expertise in the area relevant to the dispute. For example, if you’re involved in a construction dispute, you might want an arbitrator who has a background in construction law.

Arbitration in Arizona: Legal Framework

Arizona law supports arbitration through the Arizona Arbitration Act (A.R.S. § 12-1501 to 12-1518), which lays out the rules governing arbitration agreements. Under this act, Arizona courts generally uphold arbitration agreements. This applies as long as they entered willingly and the parties were given clear notice about what they were agreeing to.

It’s important to note that even though arbitration can be faster and more flexible, there are downsides. One potential downside is that because arbitrators aren’t required to follow strict legal precedent. Unlike the way judges are, there’s more unpredictability in the outcome. In addition, with binding arbitration, there’s little to no room to appeal if you think the arbitrator made a wrong decision.

Another issue some people have with arbitration is the power imbalance. This can occur in certain situations, especially in contracts. For instance, an employee might feel pressured to agree to arbitration when signing a job contract, even if they don’t fully understand what it means. The same can happen with consumers who might not realize that an arbitration clause is buried in the fine print of a contract they’re signing.

Arizona courts, like courts across the country, have generally upheld these arbitration clauses. However, there have been instances where the courts have intervened if the arbitration agreement was deemed unfair or overly one-sided. For example, in some cases, the courts have found that an arbitration agreement was unconscionable. It gave one party a significant advantage over the other in terms of selecting the arbitrator or controlling the arbitration process.

Should You Choose Arbitration?

If you’re involved in a dispute and are considering arbitration, you must weigh the pros and cons. For one, arbitration can save time, money, and keep things private. On the other hand, you give up some control over the process. Moreover, with binding arbitration, you might lose your right to appeal.

In Arizona, arbitration is a common method for resolving disputes, and the legal framework is generally supportive of it. However, before agreeing to arbitration, it’s wise to consult with an attorney. You must understand exactly what you’re giving up and what the process will look like.

Whether you’re signing a contract with an arbitration clause or deciding how to handle a current dispute, understanding arbitration is key. It can be a helpful tool in resolving issues, but it’s not right for every situation. Always make sure you know what your options are and what arbitration could mean for your case before diving in.

For more information on arbitration in Arizona, the Arizona Arbitration Act is a good place to start, as it outlines the state’s specific rules and procedures for arbitration.

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