Ch 5 Arbitration

Question 1

What are three ways to resolve disputes rather than litigation?

Answer 1

Negotiation, arbitration, mediation

Question 2

______ leads to _______ when one party makes a claim that the other denies.

Answer 2

Conflict, Dispute

Question 3

What is negotiation?

Answer 3

Process used to persuade or coerce someone to do what a person wants them to do

Question 4

Conflict?

Answer 4

occurs when there are two or more points of view, leads to disputes Not bad or negative

Question 5

Dispute?

Answer 5

Arises when one part makes a claim that another party denies

Question 6

Negotiations seek to have a ____________ ______________ outcome.

Answer 6

Mutually, acceptable

Question 7

Positional Negotiation - Positional Bargaining?

Answer 7

used instinctively by people Ex. Sales price, between the seller and buyer (meet in middle)

Question 8

Principled, Interest-Based Negotiation

Answer 8

Provides 7 elements that REMOVE certain BARRIERS created by positional negotiation. Referred as interest-based negotiation (ex. Communication, Relationship, Interests, Options, Legitimacy, Alternatives, Commitment)

Question 9

Alternative Dispute Resolution Systems (ADR)

Answer 9

ADR systems help ENSURE THE PRODUCTIVE RELATIONSHIPS needed for successful business transactions.
Differing methods of resolving disputes exist along a continuum with a negotiated settlement being the least expensive (and probably more effective)

Question 10

Scale of Dispute Resolution Systems (5)

Answer 10

Trial and Appeal (most expensive in time, cost, and emotions)
> Focus Groups
> Arbitration
> Mediation
> Negotiated Settlement (least expensive in time, cost, and emotions)

Question 11

Settlements?

Answer 11

Opinions of others are a motivating force in encouraging amicable settlements.
Juries are sympathetic to individuals who have suits against large corporations.

Question 12

Focus Groups

Answer 12

Focus groups provides attorneys insight into possible JURY REACTION to the evidence and points OUR WEAKNESSES in the case.
-these parties often settle their dispute without having to go through the formal process of either a trial or an arbitration.

Question 13

Arbitration?

Answer 13

ADR system in which the disputing parties agree to have a THIRD PARTY DECIDE THE MERITS OF THE DISPUTE.
-private, with not public record.

Question 14

who is the Arbitrator?

Answer 14

Authorized to make decisions that are binding on the parties

-considered an expert in their field.

Question 15

Benefits of Arbitration

Answer 15

Helps avoid litigation expenses and courtroom formalities,
Ease congested court dockets,
Relatively quick and inexpensive resolution of disputes

Question 16

What is a submission?

Answer 16

Act of referring a matter to arbitration

Question 17

What is voluntary arbitration?

Answer 17

Submission to arbitration by the parties

Question 18

What is mandatory arbitration?

Answer 18

Occurs when a statue or court requires parties to arbitrate

Question 19

What is an award?

Answer 19

Decision made by the arbitrator

• Not subject to judicial review
• Award is valid as long as it settles the entire controversy and states which party is to pay the other a sum of money
• Final on all issues submitted and enforceable by the courts

Question 20

Submission - What are the issues?

Answer 20

occurs when the parties enter into an agreement to arbitrate an existing dispute
-May be a question of fact or law.

Question 21

Submission - Parties can???

Answer 21

Parties can contractually agree to submit to arbitration all issues that arise in the future

Question 22

Factors that influence the selection Process of Arbitrators - Expertise?

Answer 22

Use of an expert to resolve disputes MAKES ARBITRATION PREFERABLE to litigation

Question 23

Factors that influence the selection Process of Arbitrators - Number Chosen?

Answer 23

Number of arbitrators is based on the agreement of the parties, but sometimes 3 are chosen.

Question 24

Factors that influence the selection Process of Arbitrators - Authority over certain matters?

Answer 24

Arbitrators’ authority is a topic of controversy and litigation
expert in their field

Question 25

Federal Arbitration Act (FAA) encourages

Answer 25

Encourages disputing businesses to utilize arbitration

Question 26

Federal Arbitration Act (FAA) -how valid is this?

Answer 26

FAA provides that arbitration agreements shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

Question 27

Federal Arbitration Act (FAA) - Impact on Policy

Answer 27

FAA covers any arbitration clause in a contract that involves interstate commerce

• Courts should enforce arbitration agreements
• Federal policy favors arbitration of commercial disputes
• U.S. Supreme Court strongly supports the use of arbitration

Question 28

Federal Arbitration Act (FAA) - Impact on State Law

Answer 28

Some state laws specify that designated matters are not to be submitted to arbitration
-Commerce Clause and Supremacy Clause of the U.S. Constitution invalidate state laws that deny arbitration of certain disputes

Question 29

FAA - Grounds on which arbitration can be vacated

Answer 29

a) Award was procured by corruption, fraud, or other undue means.
b) Arbitrators: Were partial or corrupt.
c) Were guilty of misconduct.
d) Exceeded or imperfectly executed their powers

Question 30

Statutorily Mandated Arbitration?

Answer 30

States statutes require mandatory arbitration for certain types of disputes.

• Types of cases: for money of a small amount
• specific subject matter i.e. divorce.
• when party demands a jury trial.

Question 31

De novo judicial review:

Answer 31

Court tries the issues anew as if no arbitration occurred

Question 32

Mandatory Arbitration Procedures:

Answer 32

Procedures: -Mandatory arbitration does not provide speedy justice.

• Discovery procedures are used prior to the hearing on arbitration.
• Arbitrators have the power to:
• ->Determine the admissibility of evidence.
• ->Decide the law and facts of the case

Question 33

Forms of Voluntarily Arbitration Agreements (2)

Answer 33

Predispute arbitration clause or Post dispute arbitration agreement.
-Efficient and affordable alternative to litigation must be achieved to encourage business people to use voluntary arbitration.

Question 34

Predispute arbitration clause:

Answer 34

Contracting parties understand that disputes are better resolved through arbitration

Question 35

Post dispute arbitration agreement:

Answer 35

Occurs when parties in dispute decide that arbitration is better than litigation

Question 36

Judicial Review of Voluntary/Contract-based Arbitration Awards:

Answer 36

Judicial review of an award is restricted and final

• Error of law renders the award void if it requires the parties to violate the law.
• Courts do not interfere with an award.
• Review can correct fraudulent actions by an arbitrator.
• Award against public policy is rescinded

Question 37

Mediation

Answer 37

Mediator attempt to assist disputing parties in resolving their differences

Question 38

Review of statutorily mandated arbitration

Answer 38

Higher level of judicial review of the award is required. -Belief that mandatory arbitration statutes are against public policy and unconstitutional
- can seek de novo judicial review (of the interpretation and application of law by arbitrators.)

Question 39

Can a party in mandated arbitration reject an award and seek a trial?

Answer 39

Yes, the award is intermediate step.

Question 40

How is mandatory arbitration unconstitutional?

Answer 40

1. deprive property and liberty without due process
2. violates 7th amendment rights to jury trial
3. violates states constitution of separation of powers

Question 41

Mediator is

Answer 41

a third person -Cannot impose a binding solution on parties -Utilize the principles of interest-based negotiations
-Cannot testify/will not testify

Question 42

Reasons for Increase in Mediation

Answer 42

1 Parties retain control over when to settle and continue disputing.
2 Cost savings
3 Reduction of the legal system governing the process

Question 43

Mediation Procedures

Answer 43

1 Mediator explains the procedures to which the parties should agree.
2 all Parties make statements about the dispute.
3 dialogue of exchange phase.
4 how to work together, evaluate solutions

Question 44

Caucus?

Answer 44

Occurs when the mediator meets privately with one party and their attorney, without other party

Question 45

Advantages to mediation

Answer 45

-Disputing parties retain full control over the resolution of controversy -no informal presentation of evidence.

Question 46

Disadvantages to mediation

Answer 46

-No enforcement mechanism to ensure the parties will mediate in good faith. -Selection of the neutral mediator. -Training and licensing requirements for a mediator are non-existent

Question 47

True/False “If the parties to a mediation sign an agreement at the end, that agreement is usually binding (can be enforced in court)

Answer 47

True

Question 48

Mediations - Lack of Judicial Involvement

Answer 48

No need for judicial review of the mediation process. If mediation is successful, it is the parties’ agreement that resolves the dispute. If the parties are not pleased with the mediation, they are free to end their voluntary involvement. Mediators have the disputing parties sign a consent to mediate that states the mediator cannot be subpoenaed or otherwise be made to testify in any judicial hearing.

Question 49

Magnuson-Moss Warranty Act

Answer 49

Magnuson-Moss Warranty Act provides that if a business adopts an informal dispute resolution system to handle complaints about its product warranties, then a customer cannot sue the manufacturer or seller for breach of warranty without first going through the informal procedures. It allows a manufacturer to require mediation before the complaining consumer can litigate.

Question 50

Litigation characteristics

Answer 50

High expense, final decision, a lot of time

Question 51

Arbitration characteristics

Answer 51

Final decision rendered by 3rd party, voluntary or mandatory, Federally preferred

Question 52

Mediation characteristics

Answer 52

not reviewable by the court, parties have control, lack of expertise

Question 53

what are the most popular ADR systems?

Answer 53

Arbitration and mediation