Litigation is the process of taking a lawsuit through the court system until a decision or verdict is issued which decides the outcome. When using the Court's civil arbitration division, a complaint is filed with the Prothonotary, served on the defendant by the Sheriff, and a hearing date is set for 3 or 4 months later. On that date, an arbitration panel comprised of 3 attorneys is assembled to hear merits of the case, which decision is subject to appeal.
Court litigation can be expensive and time consuming. An alternative to the court system is to file for dispute resolution before the American Arbitration Association ("AAA"), which has its own set of rules for handling cases. The system provides a means for parties locked in disputes they cannot resolve themselves to seek a resolution from neutral arbitrators, thus allowing them to by-pass the court system. Instead of using a panel of attorneys or a Judge, the American Arbitration Association generally appoints one qualified individual to arbitrate each case and reach a binding decision. However, as with court cases, parties using American Arbitration Association dispute resolution may still be represented by attorneys of their own selection to help them through the arbitration process and present, or defend against, their case.
To take a dispute before the American Arbitration Association, both parties must agree to this dispute resolution method. They may have agreed to this in the underlying contract involved in the dispute, or they can agree to use the American Arbitration Association once faced with a dispute. Some contracts require that any dispute arising out of the contract be taken before American Arbitration Association, which actually prevents parties from filing suit through Court. Once it is determined the American Arbitration Association is the appropriate or agreed upon dispute resolution method, forms to file the claim must be obtained from the local Pittsburgh office (which follows the American Arbitration Association Rules). The forms require the parties to include information about themselves, the nature of the dispute or claim, and the amount of damages claimed. The parties also state how long they feel will be needed for the arbitrator to hear the case. For each claim filed, a case administrator is appointed.
The next step is to select or appoint an arbitrator. The American Arbitration Association maintains lists of individuals qualified to serve as arbitrators, and the case administrator selects those having qualifications suited to the particular type of case. In some cases, a list of qualified individuals is provided to the parties, and an arbitrator is selected by the administrator according to the mutual desires of the parties. In others, including those where parties cannot agree, an arbitrator is appointed.
The case administrator also arranges a hearing date and location convenient to the parties, legal counsel and arbitrator, with input from the parties. At the hearing, testimony and documents are submitted to the arbitrator and witnesses are questioned and cross-examined.
American Arbitration Association arbitration is usually less formal than a court trial, proceeds more quickly, and results in a resolution much sooner. In contrast to the court system, a quick hearing date is usually obtained when using the American Arbitration Association. In fact, the American Arbitration Association prides itself on the speed with which a hearing can be set up, along with its expertise in providing neutral arbitrators and offering privacy not generally available via the Court system.
Perhaps the most important benefit provided by the American Arbitration Association is the finality which accompanies a decision. The arbitrator's decision is final, binding and legally enforceable. The civil court system will not second guess the arbitrator's decision, since the parties have agreed to the binding nature of the decision. There are some limited circumstances where parties agree any decision will be strictly advisory in nature.
Non-court arbitration is a popular means of dispute resolution. Labor and management, as well as the construction industry, have started using the American Arbitration Association's services. It is even more widely used in connection with commercial disputes where expediency in decision making can be critical.
The administrative fees charged for the American Arbitration Association services are higher than the initial costs associated with filing suit with the Court's civil division. The fees are scaled, and increase with the amount of the damages being sought or at issue in a case. The case arbitrator also charges a fee for his or her services. In deciding whether to submit a case to the American Arbitration Association or make binding arbitration a contractual requirement, the higher costs associated with going for a quicker, binding disposition must be weighed against the lower costs involved in taking a case through the legal system which affords several levels of appeal and the chance to retry a case if you don't get a favorable decision. You may save legal fees by going through arbitration, because the process is condensed into one, quick hearing. It may be 2 to 4 years before a commercial, employment or other case on appeal which could otherwise have been scheduled in arbitration is heard by the court system. Due to the time delay involved, days may be needed for trial preparation, it can become difficult to keep track of witnesses, and as memories become less clear over time it often forces parties to engage in expensive deposition-taking.
If you find yourself embroiled in a dispute, it would be wise to ask your attorney whether there would be an advantage to using the American Arbitration Association system, or the civil system, to get a result.