Arbitration in the United States

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Securities arbitration

Timeliness and the Non-Existence of Arbitration Agreements[edit source]


Arbitrators have wide latitude in crafting remedies in the arbitral decision, with the only real limitation being that they may not exceed the limits of their authority in their award. An example of exceeding arbitral authority might be awarding one party to a dispute the personal automobile of the other party when the dispute concerns the specific performance of a business-related contract.

It is open to the parties to restrict the possible awards that the abitrator can make. If this restriction requires a straight choice between the position of one party or the position of the other, then it is known as pendulum arbitration or final offer arbitration. It is designed to encourage the parties to moderate their initial positions so as to make it more likely they receive a favourable decision.

No definitive statement can be made concerning the credentials or experience levels of arbitrators, although some jurisdictions have elected to establish standards for arbitrators in certain fields. Several independent organizations, such as the American Arbitration Association and the National Arbitration Forum, offer arbitrator training programs and thus in effect, credentials. Generally speaking, however, the credibility of an arbitrator rests upon reputation, experience level in arbitrating particular issues, or expertise/experience in a particular field. Arbitrators are generally not required to be members of the legal profession.

To ensure effective arbitration and to increase the general credibility of the arbitral process, arbitrators will sometimes sit as a panel, usually consisting of three arbitrators. Often the three consist of an expert in the legal area within which the dispute falls (such as contract law in the case of a dispute over the terms and conditions of a contract), an expert in the industry within which the dispute falls (such as the construction industry, in the case of a dispute between a homeowner and his general contractor), and an experienced arbitrator.


The umpire is a third party chosen either by the method of the arbitral parties or by a court to render an independent decision usually in labour disputes when the arbitrators disagree on something. Umpire is another word for "arbitrator" or an arbitrator appointed to resolve an arbitration when the arbitrators can't agree.[20]

Arbitration on TV

The "judge shows" that have become popular in many countries, especially the United States, are actually binding arbitration. The People's Court and Judge Judy are famous examples.

Arbitration Fairness Act

In 2007, Senators Russ Feingold of Wisconsin and Congressman Hank Johnson of Georgia, together with numerous co-sponsors in both Houses, introduced the Arbitration Fairness Act (S. 1782, H.R. 3010) in the U.S. Congress. The bill died in Committee. Had it been signed into law, it would prohibit mandatory pre-dispute binding arbitration in consumer, employment, and franchise disputes. Parties to a dispute would still be able to choose arbitration over court if they wanted to, but individuals would be given a choice in the matter and would not be denied their constitutional right to access the courts and have a jury trial. The bill would overturn the strong presumption in favor of arbitrability that has been erected by decisions of the United States Supreme Court under the rubric of the Federal Arbitration Act, at least as applied to consumer and employment disputes. The bill is supported by the groups such as Public Citizen, Center for Responsible Lending, Consumer Federation of America, Homeowners of Texas, Homeowners Against Deficient Dwellings, Home Owners for Better Building, National Association of Consumer Advocates, National Consumer Law Center, National Consumer Coalition for Nursing Home Reform, National Employment Lawyers Association, and American Association for Justice. Opposition to the bill is led by the U.S. Chamber of Commerce's Institute for Legal Reform.

Among other things, the proposed Act states that: "No predispute arbitration agreement shall be valid or enforceable if it requires arbitration of— (1) an employment, consumer, or franchise dispute; or (2) a dispute arising under any statute intended to protect civil rights or to regulate contracts or transactions between parties of unequal bargaining power."

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