Is a binding arbitration decision really binding?

Unlike the regular court system, binding arbitration does not provide for an appeal. Rather, the arbitrator simply hears the evidence and grants an award with an explanation, the arbitration decision. If the result of a binding arbitration is inaccurate and both parties are willing to acknowledge the inaccuracy, then the arbitration will no longer be binding. If only one party feels the decision is inaccurate, the arbitration decision will most likely still stand unless the opposing party takes further legal action.

If you personally disagreed with the arbitration decision, but your attorney is advising you that it was in all likelihood correct, then you should simply honor the award. If your attorney is advising you that the award was granted inaccurately, then you may wish to consider taking your case to the regular court system. Contrary to popular belief, cases that are decided in binding arbitration can still be filed in the court system. However, you will be sued by the opposing party for breach of contract since you will have previously signed a contract waiving your rights to a trial.

Arbitration is less expensive than a trial and is completely private. Unless you actually decide to then file a lawsuit, the public will never be made aware that you were disputing with the opposing party. In addition, arbitrations are typically heard by retired judges, so you will be getting an equivalent result to a trial, simply without all the extra time and expenses.

Case Studies: Is a binding arbitration decision really binding?

Case Study 1: Mutual Agreement to Withdraw – Smith Manufacturing vs. Johnson Supplies

Smith Manufacturing and Johnson Supplies have a binding arbitration agreement to resolve their contractual dispute. However, during the arbitration process, both parties, Smith Manufacturing and Johnson Supplies, mutually agree to withdraw the case before an award is issued. As a result, the arbitrator loses authority, and the arbitration decision becomes non-binding. This case highlights the flexibility of arbitration and the ability of parties to resolve their disputes outside of the arbitration process.

Case Study 2: Disagreement on Accuracy – Mary Thompson vs. Alpha Insurance Company

Mary Thompson files a personal injury claim against Alpha Insurance Company, and they engage in binding arbitration to settle the dispute. The arbitration decision is issued, but Mary Thompson disagrees with its accuracy. If both parties, Mary Thompson and Alpha Insurance Company, acknowledge the inaccuracy and are willing to address it, the arbitration decision can be rendered non-binding.

However, if only one party disputes the decision, it generally remains binding unless the opposing party takes further legal action. This case underscores the importance of seeking legal advice to assess the accuracy and potential recourse in the face of an unfavorable arbitration decision.

Case Study 3: Seeking Judicial Review – John Davis vs. Mega Corporation

John Davis enters into a binding arbitration agreement with Mega Corporation to resolve a contractual dispute. After receiving an arbitration decision that he believes to be incorrect, John Davis consults his attorney. The attorney advises him that the decision was likely accurate.

However, if John Davis still wishes to challenge the decision, he has the option to file a lawsuit in the regular court system. This case emphasizes that although arbitration is a cost-effective and private alternative to trials, parties can pursue litigation if they believe it is necessary to seek a different outcome.