Arbitration has been a popular method to find a remedy for business disputes for centuries. And in recent times, the number of individuals that have shown a preference for arbitration over traditional court proceedings has been on the rise.

A major difference that exists between arbitration and litigation is that parties to an arbitration hearing have input into the selection of the arbitrator that will hear the elements of the dispute.

The parties to an arbitration hearing are permitted to suggest a candidate when a sole arbitrator is needed. When the arbitration hearing is set to be heard by a three-member tribunal, each side of the dispute is allowed to appoint one member to the tribunal. The two tribunal members then work together to designate the third member of the tribunal. The third member will act as chairman of the tribunal.

NOTE: Arbitration can be performed with (1) arbitrator or a panel of (3), (5), (7) or how ever many the parties in a dispute require. Costs do go up substantially as the number of arbitrators increases. This allows for multi-party disputes to have their selected arbitrator and the arbitrators select a neutral chairman. All parties MUST agree on each arbitrator and all arbitrators MUST be neutral and unbiased.  

Generally speaking, the arbitrator title is one that nearly anyone can wear. There are no qualifications or certifications that are needed to be appointed to the role. It is only necessary that the parties involved in the dispute agree to adhere to the authority they give to the arbitrator.

Because of this, the selection of the right arbitrator is of utmost importance. The following five traits should be present in all prospective candidates considered for the role of arbitrator.

Competent

One significant advantage of taking part in the selection process of an arbitrator is that parties to the dispute can assure that arbitrators possess expertise that applies to the matter at hand. For example, a dispute between two business entities operating in the energy field may benefit from an arbitrator with experience in the oil and gas industry. This will eliminate the necessity for parties to the dispute to explain basic industry issues during the arbitration hearing.

A tendency exists to look for arbitrators that possess formal legal training. It is not necessary that the search for a good arbitrator be confined to these parameters. However, finding an arbitrator with legal training obviously wouldn’t hurt if it appears it would be beneficial, or if it provides peace of mind.  

This approach will assure that an arbitrator is selected that is capable of providing a rational and legally sound decision to settle the dispute. It will also ensure they are literate in whatever field is required. Learn.org explains, “specialty areas of arbitration focus on commercial, consumer, labor, employment or construction disputes.” As such, arbitration hearings pertaining to niche industries may benefit more from an industry professional.

Patient And Objective

Arbitrators that are both patient and objective make the best candidates to oversee arbitration hearings. A lawyer should be attentive and take time to give you the service you need. Allan Ziffra says, “good lawyers will treat each case as if it were their only case in order to give it the attention it deserves.” This standard should be no different when an attorney, judge, or other legal professional is acting in the capacity of an arbitrator.

The best arbitrators remain completely neutral throughout the arbitration process. They can refrain from taking sides in either direction until the totality of testimony are delivered.

The concept of objectivity should also be apparent in the way the arbitrator runs the proceedings. All proceedings should be organized and facilitated in a manner that is fair to both parties. This will prevent any bad feelings from developing among the parties involved.

Parties to a dispute are much more likely to accept judgments from an arbitrator that makes it clear that he or she was fair and impartial throughout the entire arbitration process.

Private

Another way that arbitration differs from traditional legal proceedings in that they are private matters. The happenings within an arbitration hearing will not become public record. It is essential that the arbitrator remain aware of this fact. According to Bob Kelly, “a good arbitrator understands the need to maintain discretion throughout the proceedings and in the decision.” The arbitrator should not say or do anything that will compromise the confidentiality of the hearings.

An arbitrator should never engage in conversation with anyone that is not part of the proceedings. Also, no arbitrator should have a private interaction with either party to the dispute while the arbitration process is ongoing.

Once the process of arbitration is complete, arbitrators should still remain mindful of the privacy of both parties involved in the hearings. Arbitrators should not divulge information from an arbitration hearing unless both parties involved provide the arbitrator with an agreement to do so.

There are (2) exceptions to this expectation of confidentiality:

1. When it is required by law that an arbitrator reveal details of an arbitration hearing.
2. Parties agree to make a public statement, usually through the arbitrator or an agreed upon spokesperson. This is common in labor strikes and sports.

Skilled Communicator

It is a must that a skilled arbitrator is a great communicator. He or she should be a good listener and have an understanding of the position taken by both parties.

Arbitrators should allow both parties to fully articulate their grievances once the hearing begins. Arbitration hearings are conducted without the formalities of court proceedings. This means that a good arbitrator should be willing to patiently listen as parties are allowed to make their respective cases with no interruptions.

Parties are allowed to use non-attorney representatives (NAR) in an arbitration hearing or may themselves put on their case (pro’se); therefore, the arbitrator must be flexible to hear party representatives fully.

Temperament

Arbitrators need to combine the ability to objectively consider the facts of the dispute with the understanding of how their subsequent decision will affect the lives of all individuals involved. James J. Palmer reinforces, “the parties expect that [an arbitrator] of a particular grievance will reflect not only what the contract says but, insofar as the collective bargaining agreement permits, such factors as the effect upon productivity of a particular result, its consequence to the morale of the shop, [and] his judgment whether tensions will be heightened or diminished.” Meaning, an arbitrator needs to know the long term and social effects an agreement will have on those involved and those working under or around those involved. Because of this, it is required of an arbitrator to remain courteous and professional while listening with an open mind to both sides of the contested positions.

Candidates to oversee arbitration hearings should be patient, tactful, courageous, open-minded, and compassionate. Individuals considered for the position of arbitrator should have demonstrated these traits throughout their present careers.

Candidates for arbitrator should be able to interact with others without bias and prejudice. The individual should also be able to interpret data that may be new to him or her without becoming stressed or frustrated. Candidates should not unload on others when stressed and should take the job they have been entrusted to perform with all seriousness.

Conclusion

The importance of choosing the right arbitrator to aid in the settlement of a business dispute cannot be understated. A good arbitrator will work to find a solution that provides some benefit to both parties, if possible. When situations arise with disputes that do not allow for the benefit of both parties, a good arbitrator will often be able to find a solution that minimizes the damage to the losing party.

The five traits discussed above should be clearly present in all candidates considered for the position of an arbitrator.