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What Is an Arbitrator?

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  • Written By: Charity Delich
  • Edited By: Bronwyn Harris
  • Last Modified Date: 05 September 2014
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An arbitrator is a person who has been chosen to preside over an arbitration proceeding, which is a method of alternative dispute resolution. Arbitrators typically play the roles of both judge and jury. In addition to addressing procedural issues, hearing each party’s side of the case, and weighing the evidence, they also apply the law and render a final verdict in the proceeding. In most circumstances, an arbitrator’s decision is binding on the parties.

Arbitrators may govern the proceedings on their own, or they may be members of an arbitration panel, which is comprised of multiple arbitrators. Arbitration panels frequently consist of an odd number of people in order to avoid a deadlock in reaching a decision. If an arbitration panel is chosen, a chairperson may be selected to lead the panel. Typically, the chairperson sets the agenda but otherwise has the same duties as the rest of the panel members.

Sometimes an arbitration panel includes an umpire. The umpire generally does not actively participate in the proceeding unless the other members of the panel are unable to reach a decision in the case. In that situation, the umpire frequently becomes the sole decision maker.

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Arbitrators are generally selected by the parties involved in the dispute. In many cases, this determination is made by a contractual clause long before the dispute arises. For instance, an arbitration clause in a contract may specify that a single arbitrator or a panel of arbitrators will govern the proceedings. Clauses may also dictate who will serve as the arbitrator or whether someone will be appointed by a professional arbitration organization. The selected arbitrators must be fair and impartial, and they cannot have a personal interest in the outcome of the case.

Arbitrators are customarily paid for their services. As a general rule, each of the parties involved in the arbitration pays an equal share of the arbitrator's fees. In some cases, however, the losing party may be bear all of the arbitration fees and costs, including the arbitrator’s fees. If the parties fail to pay, the arbitrator may sue them in order to recover his or her fees.

An arbitrator generally has expertise in the area of law at issue. For instance, international arbitrators usually have a solid grasp on international law. Some jurisdictions require arbitrators to be lawyers, judges, or law school graduates. Other jurisdictions are more lenient but may require credentials such as a college degree. In most jurisdictions, arbitrators are required to complete an arbitration training course.

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Discuss this Article

David09
Post 4

@nony - It’s a double edged sword. Yes, arbitration and mediation services will get you less money.

But if you went through the courts and lost, you would usually give up more money than you would have had you gone the arbitration route.

This is why in the news you hear a lot about commercial arbitration in hotly contested lawsuits between two or more very big players. Even settling outside of court in these cases may mean paying millions of dollars; but one or both parties realize that going through the courts could potentially mean tens or hundreds of millions of dollars.

Arbitration is the cost effective way to go in my opinion.

nony
Post 3

People who sign an arbitration agreement must have mutually agreed that it would be better to use a professional arbitrator and settle outside of court.

However, it’s my gut impression that no matter which way the arbitration turns out, in many cases one of the two parties may end up feeling that they got the short end of the stick, agreements notwithstanding.

I think that you surrender a good deal of your personal prerogatives when you go this route.

I understand that arbitration is usually more convenient than using the judicial system, but if you have a good lawyer you can usually gain more if you win a case in the courts. Settling through arbitration means you get less money.

PinkLady4
Post 2

With all the global trade that is going on these days, I'm sure there are a lot of business and trade contracts between companies in different countries.

I read a magazine article that told how decisions on disagreements are made in international cases of contracts that aren't working right. Right off, you can see that there would be problems of language, other legal systems, how to choose arbitrators.

Over the years, international law has set up a system that works pretty smoothly. Either before the dispute, or after, the parties agree about what language to use in arbitration, what set of laws to use, make sure the arbitrators are neutral, and agreement that the final decision will be final - no appeals. All parties want to be sure that they have chosen professional arbitrators, who know international law very well.

If this system didn't work well, there would probably be some serious problems in international trade.

Esther11
Post 1

I'm curious to know how many people actually know how arbitration works. I know the basics of what arbitration is, but I really didn't know how it works in business, before I read this article.

It seems that it is built into most contracts, so the parties agree that in case of a disagreement, they will go through arbitration, instead of court proceedings.

I can understand why most businesses would rather have arbitration. It costs less than court, there are no lawyers in the mix, and they can choose which arbitrators they want to handle the dispute. They, of course, would try to find arbitrators who are impartial and know the subject well.

Many arbitrators are very knowledgeable about a particular area and are often lawyers besides. In most places, they have to pass a certification test.

Arbitration is similar to court in that the two parties tell their side, the arbitrator makes sure legal rules are followed. Then he makes a decision.

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