Best Practices in Arbitration for Hospitality Cases

Pros and Cons of Arbitration Compared to Mediation, Expert Determination and Litigation

By Albert Pucciarelli Partner, McElroy Deutsch Mulvaney & Carpenter, LLP | September 18, 2016

In my two prior articles on alternative dispute resolution, I discussed mediation and expert resolution. In ascending order in terms of "severity" of the matter in dispute, the next alternative for resolving disputes is arbitration. By "severity", I am referring to the either the complexity of the question to be resolved where legal interpretations, document discovery and witness testimony, even expert witness testimony, may be utilized by the parties to present their side of the dispute. In short, the matter to be arbitrated typically is not unlike matters over which parties go to court, but for reasons we will explore, arbitration may be preferable.

As with expert resolution, in arbitration, a neutral third party, or, more commonly, a panel of three parties, the "arbitrators", are called upon to resolve the issue, to render a binding decision, as a judge might render, after a process that is similar to a court proceeding

The question to be decided should be carefully crafted by the parties by means of an agreed "terms of reference" submitted to the arbitrators. The parties in their agreement to arbitrate may empower the arbitrators to make pre-decision orders (interim relief) as a court would do by issuing an injunction whereby the parties are ordered to do or refrain from doing certain acts pending the outcome of the arbitration.

In the early stages of the arbitration, the parties may request that the arbitrators make decisions about the scheduling of witness depositions, the production of documents and the details (time, place) of the arbitration hearing before the arbitrators.

If the dispute is monetary, the parties may also agree to 'baseball arbitration' whereby the expert is required to choose the position of one of the parties as correct or left free to determine the correct remunerative value. In any case, the parties should agree either in the contract calling for expert resolution or in their subsequent agreement that the expert's decision is binding and unappealable, except for 'manifest error'.

Selecting the Arbitrator(s)

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