Who decides whether an arbitration agreement is binding?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Arbitration is an out-of-court alternative to solving legal disputes. Unlike the regular court, arbitration is only binding in certain specific circumstances, and an arbitration decision never infringes upon the court’s authority on a case. Arbitration cases cannot be appealed like court decisions, so it is imperative that you act if you are dissatisfied with the arbitration outcome.

What is arbitration?
Arbitration is, for all intents and purposes, a rehearsal trial. An arbitration proceeding is overseen by an arbitrator who is usually either a retired judge or attorney. Both parties will be represented by their attorneys and can present all of their evidence and arguments. At the end of the arbitration proceeding, the arbitrator will make a finding and draft an arbitration agreement that specifies his finding.

What is the arbitration agreement?
The arbitration agreement is equivalent to a judgment from a trail court judge. The only difference is that an arbitrator made the decision instead of a judge. The decision usually follows typical law with regard to damages, but the arbitrator does have the freedom to propose alternative measures to solve a problem.

Is an arbitration agreement binding?
There are two ways that an arbitration agreement becomes binding. First, if the parties agree that the arbitration agreement will be the final judgment, then the judge overseeing the case will enter it as such. Second, if the parties signed a binding arbitration agreement for dispute resolution, then the arbitrator’s decision is final.

What if I do not agree with the arbitration decision?
If you do not agree with the decision of the arbitrator, then you can reject the arbitration ruling and opt for a trial instead, in which case the trial judge will set the court date. If you were arbitrating based on a binding arbitration agreement, you can still file a complaint; however, you will most likely be counter-sued by the other party for breach of contract.

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