Arbitration is a form of dispute resolution based on an agreement by the parties to arbitrate their claims, rather than utilize the courts. An arbitration consists of the parties and their counsel, and at least one arbitrator who acts as the judge and jury or decision-maker. Whether to use one arbitrator, or a three-person panel, is a decision made by the parties in their arbitration agreement.
Arbitration is conducted similarly to a trial, but is more informal and may not utilize the rules of evidence and procedure utilized in a trial. Generally, parties are able to mutually agree on an arbitrator, or at least strike potential arbitrators, whereas in a Texas court, you are assigned a specific judge. Parties also must give up their right to a jury trial in arbitration. Arbitration is typically binding and unappealable, although there are a few exceptions that allow arbitration to be non-binding or appealable. Once the arbitrator issues a final ruling, the prevailing party files it in court to effectuate a collectable, enforceable judgment.
The costs of mediation and arbitration are generally split between the parties, making it an attractive option for parties. However, in arbitration, unlike a judicial proceeding, all costs, including the cost of the arbitrator(s), are incurred by the parties. Arbitration decisions are typically reached much more quickly than a judicial proceeding, and are generally final. Both mediation and arbitration allow parties to reach decisions and judgments more narrowly tailored toward the parties than a judicial proceeding can allow.