Current Shareware 1994 January/SHAR194.ISO/finance/entresec.zip/CH30.TXT

Text File | 1993-09-21 | 9KB | 147 lines

             SETTLING DISPUTES THE INEXPENSIVE WAY -- THROUGH
          ARBITRATION

               The traditional American way of settling disputes
          of any substance is through court proceedings.  While
          many individuals still feel that being sued -- and in
          some cases, suing -- carries a stigma, most U.S.
          businessmen see the courtroom proceedings as nothing
          more than a necessary, and usually extremely expensive,
          evil.  The result is that judges and juries, often
          totally unversed in the subject matter of a civil suit,
          are hearing everything from divorce cases to
          contractual controversies, to bodily damage suits.
          Attorneys are grossly over-committed, court schedules
          burgeoning with backlogged cases, judges harried, and
          jurors more often than not reluctantly impaneled.  As a
          result, the only prognosis that a defendant and
          plaintiff can make with certainty is that, regardless
          of the merits of a case, litigation will be slow,
          costly, and often inequitable.
               There is, however, an alternate method of settling
          legal controversies and disputes.  It is a considerably
          less expensive method than the traditional court trial;
          it is a method that not only has its roots in our
          common-law legal concept, but also has statutory
          recognition at both the federal and state level; and
          most importantly, it is effective.  The method is
          arbitration.
               The use of arbitration is not new.  It was
          practiced by the ancient Greeks and Romans, from whom
          we inherited many of our legal concepts.  Throughout
          American history it has either been used or advocated.
          Abraham Lincoln, for example, advocated that lawyers
          should try to keep their clients out of the courtroom,
          and to illustrate the principle, he arbitrated a
          boundary dispute between two farmers.  The concept of
          arbitration is well established in U.S. labor disputes;
          and a well-known U. S. athlete has recently been
          released from his contract through an arbiter's
          decision.
               State and federal statutes require that the courts
          recognize arbiter's decisions, and arbitration has been
          incorporated into international treaties.  The statutes
          require that awards under arbitration be given the
          force of court judgments, and, if the rules of
          arbitration are adhered to (both parties must agree to
          the arbiter's use, and must agree to abide by his
          decision), the case cannot be re-examined on its merits
          or on the basis upon which the arbiter reached his
          decision.
               Businessmen are not the only ones who can benefit
          from arbitration.  Even though the no-fault divorce has
          done much to remove the soap opera atmosphere from the
          divorce proceedings, arbitration would be less
          expensive and equally effective, particularly when
          substantial amounts of property are involved.  In
          principle, any kind of contract -- including separation
          agreements, contracts of purchase and sale, leases,
          etc., may contain a clause stipulating that disputes
          may be resolved through arbitration.  If a contract
          contains this clause, the use of arbitration cannot be
          circumvented unless both parties subsequently agree to
          it, and the courts will require that the case be
          arbitrated rather than going to trial.
               Another merit of arbitration is the privacy it
          allows.  The arbiter hears the case in the presence of
          the principals, with judge, jury, spectators and/or
          newspaper reporters excluded.  Time-consuming legal
          maneuvers and issue-clouding rhetoric by over-ambitious
          attorneys are eliminated, with the result that a case
          in arbitration moves much more quickly to its
          conclusion.  Moreover, there will be no rules of court
          that could conceivably keep relevant information out of
          the case, a fact which should do much to assure equity.
               Even if the original contract does not contain an
          arbitration clause, it can be incorporated into the
          document upon the agreement of the parties at a later
          date; and, even after controversy has arisen, the
          principals may agree to arbitration rather than going
          to court.  As an advocate of arbitration has said,
          "Even when the parties in a dispute can't agree on
          anything else, the idea of arbitration may sound good
          to them."
               Arbitration was criticized in early English
          history, because it "ousted the courts of their
          jurisdiction."  But today, any businessman who has been
          to court has learned that most business matters do not
          really belong under the jurisdiction of a court.  While
          business obligations and commitments accumulate at a
          steady rate, the court grinds out decisions with mind-
          numbing slowness -- especially in cases that require
          some expert knowledge in a business matter.  Most
          experts now agree with former United States Chief
          Justice Harlan F. Stone, who said, "(business disputes)
          can be better determined by an arbiter with training
          and experience in a particular trade or business than
          by a judge or jury who have not had that training and
          experience."
               Arbitration is not a concept to simply be talked
          about and pointed to as an idealistic but impractical
          dream, but is currently a reality, in the form of the
          American Arbitration Association, which has been in the
          business of arbitrating disputes for more than 50
          years.  Recent AAA statistics show that of 35,000 cases
          handled, 14,000 involved automobile accidents, 13,000
          involved labor-management disputes, and 4,000 involved
          contract disputes between businessmen.  The AAA also
          handled cases involving consumer problems, medical
          malpractice claims, and family/personal disputes.
               Here's how the AAA operates:  It provides the
          parties in dispute with a list of arbiters, from which
          each party may select arbiters of his choice.  Each
          party is given seven days to study the list, eliminate
          unwanted names, and indicate preferences in the
          remaining names, through a numbering system.  If the
          parties cannot thus agree on an arbiter, the AAA will
          submit them another list.  If the second list does not
          elicit a mutual choice, the AAA will then appoint an
          arbiter -- being sure, however, not to appoint one
          whose name was eliminated from the list.  The parties
          are then given the choice of being represented by a
          lawyer, or proceeding without a lawyer (the officers of
          a corporation may represent their company in
          arbitration, but may not do so in a court trial).
               The fees of the AAA for this service are a
          percentage of the total amount in dispute, beginning at
          3% for the first $10,000.00, and declining as the
          amount increases.  Stenographic records of the
          arbitration will be kept only if requested by the
          parties, who must then bear the cost of it.  The
          arbiter will render a written and signed decision,
          usually within 30 days.  The arbiter's decision is
          final and cannot be appealed.
               While U. S. courts continue to be glutted with
          civil cases, and experts mull ways of expediting the
          overburden of cases through these halls of justice,
          arbitration as a fast and efficient method of serving
          civil equity remains comparatively unpublicized.  But
          it is available, and can and should be used by more
          Americans.