Arbitration and Mediation

The right to a jury trial as a means of resolving civil disputes is enshrined in the Seventh Amendment to the U.S. Constitution. However, the perceived shortcomings of litigation have resulted in increasing use of alternative dispute resolution (ADR) mechanisms, such as arbitration and mediation. Protracted discovery and docket backlog cause cases to reach trial many years after the occurrence of the events that gave rise to the litigation.

Because ADR generally resolves disputes in less time than it takes to get to trial, the parties can avoid prolonged "litigation stress" and minimize the p​olarizing effects of trial on the parties. Lack of confidence in the competence of jurors as fact finders, unpredictability in jury verdicts, high legal defense costs, excessive damage awards, and costs of appeals from verdicts and judgments are considerations that also favor ADR. ADR may be implemented before, during, or after litigation. Court-appended pretrial ADR is available in many jurisdictions and offers opportunities for litigants to resolve disputes short of full-blown trials.

Arbitration, unlike mediation, is an adversarial process whereby the parties submit information about the controversy to an arbitrator or panel of arbitrators that renders a decision. Contracts may provide for ADR in a private forum, as individuals and entities may agree in advance to arbitration in the event of a dispute. In 2012, the U.S. Supreme Court upheld a provision in a nursing home admission contract that called for binding arbitration of all disputes "other than claims to collect late payments owed by the patient" (Marmet Health Care Ctr., Inc., v. Brown). In that case, the high court cited the Federal Arbitration Act (FAA), holding that the FAA preempts conflicting state policy or state law that prohibits arbitration.

Arbitration decisions may be nonbinding or binding. In binding arbitration, the parties agree that the decision is final and may be enforced in judicial proceedings. The FAA and state laws provide a very limited right of "appeal" to the courts to vacate or modify binding arbitration decisions, for reasons such as lack of fairness or process integrity, fraud, or corruption. The rules of some private arbitration organizations allow for "appeals" to the organizations' arbitration tribunals (AAA).

As of June 2018, 21 states and the District of Columbia had adopted the Revised Uniform Arbitration Act (RUAA), which takes effect July 1, 2019. The RUAA replaces the original Uniform Arbitration Act, which was promulgated in 1956, and addresses several issues that arise in modern arbitration that were unaddressed in the original act. (Yusem and Pepe) See Regulations and Standards​ for further discussion.

The American Health Lawyers Association has identified types of disputes other than medical negligence claims that may be resolved by arbitration, including the following (Benesch and Drucker):

In an attempt to tap the potentially higher monetary damages that jurors may award, plaintiffs and their attorneys continue to challenge binding arbitration agreements signed before the dispute arose. Although the U.S. Supreme Court has repeatedly held that the FAA preempts conflicting state laws and state policies prohibiting arbitration, several other strategies—such as those challenging the enforceability of arbitration agreements under state contract laws—remain available to plaintiffs. Therefore, organizations that use predispute binding arbitration agreements should ensure that the agreements themselves and the ways...