Alternatives to Arbitration
In Nemecek & Cole v. Horn B233274
2d District July 23, 2012
the court rejected arguments by the losing party in an arbitration that the award should have been vacated because the arbitrator had failed to disclose in advance certain relationships that he had with a party to the arbitration. One of the many points that were raised was that the arbitrator and the party were both members of a bar committee comprised of 186 members.
The case points to the continual attempts that are made by losing parties in arbitration to find a way to have the award vacated. Motions to vacate arbitral awards are rarely granted, but the frequency with which they are made calls into question the finality of arbitration. Finality becomes elusive when losing parties are reluctant to accept it, preferring instead to litigate.
Arbitration can also lead to other forms of litigation, which occur even before the arbitration commences. Thus, courts are often required to rule on the arbitrability of a dispute or the enforceability of the agreement to arbitrate. The avoidance of litigation, which is the whole purpose of arbitration, is thereby frustrated.
Consider also that some of the perceived advantages of arbitration are in the minds of many people actually disadvantages. These include the lack of any right of appeal, the fact that arbitrators are not required to follow the substantive law applicable to the case nor the rules of evidence or civil procedure, and that pre-hearing discovery can be limited or even unavailable. These attributes of the process, which are supposed to make it faster, more efficient and less costly, are seen as major drawbacks.
The question whether arbitration is a good idea or not is constantly being debated. Those who believe that it is not a good idea should be aware that California law provides other alternatives to arbitration besides litigation. Code of Civil Procedure Section 638 authorizes the court to appoint a referee for the purpose of hearing and deciding a case. When submitted to the court, the referee's decision then becomes the basis for entry of a judgment.
For further information, refer to "Judicial Reference: A Better ADR Alternative".
This article compares arbitration to the process of "binding mediation," which was validated in the case of Ryan N. Bowers et al. v. Raymond J. Lucia Companies, Inc., DO59333, Fourth District, filed May 30, 2012
Michael Carbone is a full time neutral whose practice focuses primarily on construction claims and defects, real estate, business disputes and complex litigation. He has mediated and arbitrated for approximately ten years. He has served as a court-appointed referee in real estate and business matters.
He is a past president of The Mediation Society, a member of the State Bar Standing Committee on ADR, the ADR Committee of the State Bar Business Law Section, and the Board of Directors of the California Dispute Resolution Council.
He practiced law for more than thirty-five years. His practice emphasized commercial real estate and general business matters, including litigation of construction, real property, land use, and business cases.
Additional articles by Michael P. Carbone