Alternative Dispute Resolution and Arizona Businesses
Increasingly, businesses are including alternative dispute resolution (ADR) clauses in standard business-to-business and consumer contracts, and even businesses without ADR clauses opt for ADR procedures to resolve disputes while keeping court and legal costs to a minimum.
Mediation
Most Arizona alternative dispute resolution attorneys prefer to start the ADR process with mediation. In fact, many standard ADR clauses require the parties to a dispute to submit to mediation before moving to binding arbitration or litigation. In a mediation, both parties submit a short brief or position paper to the mediator before the process begins.
Depending on party agreement, the mediator may share these briefs with the other side. At the mediation, all parties gather in one room, and the mediation usually begins with a plaintiff presentation, followed by a defendant presentation. Then the mediator submits both parties to a question and answer session in an attempt to more fully understand the position, goals, and points of compromise of each party.
At this point, the parties retreat to private rooms and the mediator begins a period of shuttle diplomacy, asking further questions and probing values and willingness to compromise of each party. Here, the experience of the mediator with the law and knowledge of the industry involved in the dispute become especially invaluable. The mediator tries to drive both parties into a settlement range that the mediator believes fair and reasonable given the facts, the law, and the industry. If the parties reach that range, the mediator proposes a settlement to the parties, but the recommendations of the mediator are not binding.
Arbitration
Two sets of law govern arbitration in Arizona: the Federal Arbitration Act, and—as of January 1, 2011—the Arizona Revised Uniform Arbitration Act. If you are required to or choose to submit your business dispute to alternative dispute resolution by arbitration, you need an Arizona lawyer who knows both sets of laws and how they interact with each other.
Arbitrations more closely resemble court proceedings than mediations, without subjecting disputants to the full costs of court proceedings. Arbitration is strictly a matter of contract between the two parties, but public policy favors arbitration, so courts will generally resolve doubts about the applicability of arbitration provisions in favor of arbitration.
Once referred to arbitration, the parties to the dispute select an arbitrator or arbitrators following the procedures established in their contract, frequently relying on rules promulgated by the American Arbitration Association or the International Institute for Conflict Prevention & Resolution. As a general rule, arbitration allows for more limited discovery than traditional state and federal discovery rules, without being bound by standard rules of evidence. This allows for a cheaper and simultaneously more effective discovery process.
Parties may appeal the award of the arbitrator only under very limited circumstances, unless both parties have agreed to non-binding arbitration. Under the Arizona Revised Uniform Arbitration Act, parties may modify or waive applicability of most, but not all, provisions of the law as best suits their contractual needs.
Whether to have an arbitration clause in a contract should be discussed on a business-by-business. The parties may waive rights in arbitration (e.g. punitive damages and/or jury trial) and arbitration has fees that a normal litigation case does not have (e.g. the case administration and arbitrator fees).
ABOUT THE AUTHOR: Donald W. Hudspeth, Esq.
Donald W. Hudspeth grew up in Middle America—the middle of Kansas. His father and uncle owned booming businesses—it was only right that Don would own one as well. As a student in Kansas he graduated with double majors then completed graduate school. Donald lived in San Francisco in the late 1960's where he saw the light of the time. He became a business owner and operator and soon became a businessman. Don owned and operated bars, restaurants and was a stock broker before coming to Arizona. In Arizona, Donald owned and operated successful bath shops in malls even before they were popular. In 1988, Donald Hudspeth graduated with a JD from Arizona State University Law School and in 1993 earned his own Business Law Firm. In 1999 and 2007 he went to Harvard Law School Public Instruction for Attorneys. Today, Mr. Donald W. Hudspeth owns a successful Law Firm in Phoenix with numerous employees--he lives on a mountain and loves where he is at and where he has been.
Copyright Law Offices of Donald W. Hudspeth, P.C.
More information about Law Offices of Donald W. Hudspeth, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
Most Arizona alternative dispute resolution attorneys prefer to start the ADR process with mediation. In fact, many standard ADR clauses require the parties to a dispute to submit to mediation before moving to binding arbitration or litigation. In a mediation, both parties submit a short brief or position paper to the mediator before the process begins.
Depending on party agreement, the mediator may share these briefs with the other side. At the mediation, all parties gather in one room, and the mediation usually begins with a plaintiff presentation, followed by a defendant presentation. Then the mediator submits both parties to a question and answer session in an attempt to more fully understand the position, goals, and points of compromise of each party.
At this point, the parties retreat to private rooms and the mediator begins a period of shuttle diplomacy, asking further questions and probing values and willingness to compromise of each party. Here, the experience of the mediator with the law and knowledge of the industry involved in the dispute become especially invaluable. The mediator tries to drive both parties into a settlement range that the mediator believes fair and reasonable given the facts, the law, and the industry. If the parties reach that range, the mediator proposes a settlement to the parties, but the recommendations of the mediator are not binding.
Arbitration
Two sets of law govern arbitration in Arizona: the Federal Arbitration Act, and—as of January 1, 2011—the Arizona Revised Uniform Arbitration Act. If you are required to or choose to submit your business dispute to alternative dispute resolution by arbitration, you need an Arizona lawyer who knows both sets of laws and how they interact with each other.
Arbitrations more closely resemble court proceedings than mediations, without subjecting disputants to the full costs of court proceedings. Arbitration is strictly a matter of contract between the two parties, but public policy favors arbitration, so courts will generally resolve doubts about the applicability of arbitration provisions in favor of arbitration.
Once referred to arbitration, the parties to the dispute select an arbitrator or arbitrators following the procedures established in their contract, frequently relying on rules promulgated by the American Arbitration Association or the International Institute for Conflict Prevention & Resolution. As a general rule, arbitration allows for more limited discovery than traditional state and federal discovery rules, without being bound by standard rules of evidence. This allows for a cheaper and simultaneously more effective discovery process.
Parties may appeal the award of the arbitrator only under very limited circumstances, unless both parties have agreed to non-binding arbitration. Under the Arizona Revised Uniform Arbitration Act, parties may modify or waive applicability of most, but not all, provisions of the law as best suits their contractual needs.
Whether to have an arbitration clause in a contract should be discussed on a business-by-business. The parties may waive rights in arbitration (e.g. punitive damages and/or jury trial) and arbitration has fees that a normal litigation case does not have (e.g. the case administration and arbitrator fees).
ABOUT THE AUTHOR: Donald W. Hudspeth, Esq.
Donald W. Hudspeth grew up in Middle America—the middle of Kansas. His father and uncle owned booming businesses—it was only right that Don would own one as well. As a student in Kansas he graduated with double majors then completed graduate school. Donald lived in San Francisco in the late 1960's where he saw the light of the time. He became a business owner and operator and soon became a businessman. Don owned and operated bars, restaurants and was a stock broker before coming to Arizona. In Arizona, Donald owned and operated successful bath shops in malls even before they were popular. In 1988, Donald Hudspeth graduated with a JD from Arizona State University Law School and in 1993 earned his own Business Law Firm. In 1999 and 2007 he went to Harvard Law School Public Instruction for Attorneys. Today, Mr. Donald W. Hudspeth owns a successful Law Firm in Phoenix with numerous employees--he lives on a mountain and loves where he is at and where he has been.
Copyright Law Offices of Donald W. Hudspeth, P.C.
More information about Law Offices of Donald W. Hudspeth, P.C.
View all articles published by Law Offices of Donald W. Hudspeth, P.C.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.
