Since litigation can be time-consuming, expensive, and unpredictable, alternative dispute resolution (ADR) methods like arbitration and mediation have become increasingly useful in resolving disputes outside the courtroom.
In Arizona, parties to civil disputes have a duty — which may be mandatory in some cases — to consider ADR before proceeding with litigation. If they are reasonable, both parties usually recognize that negotiating a mutually beneficial settlement is better than going to trial. If you are in a contract dispute, you may be required to participate in arbitration or mediation before filing suit. These days, most courts encourage the parties involved in a civil lawsuit to attempt mediation before setting a trial date.
About arbitration in Arizona
Arbitration is a private, formal hearing process where a dispute is submitted to an impartial arbitrator (or panel of arbitrators) for a final judgment. Unlike courtroom litigation, there is no formal discovery process and the legal rules of evidence are not applicable. Both sides have the opportunity to present their cases to the arbitrator, who acts as the judge and makes a final ruling that is typically binding.
In Maricopa County, arbitration is mandatory for disputes valued at $50,000 or less. An arbitrator is chosen by the court from a list of attorneys that have been licensed by the State Bar of Arizona for at least four years to resolve the dispute and decide on any award. Each party has the right to request a different arbitrator within 10 days of the appointment; an arbitrator may also disqualify himself or herself if there is a conflict of interest or personal reason why he or she cannot serve.
The Revised Uniform Arbitration Act (RUAA) governs claims that arise from any agreement to arbitrate made on or after January 1, 2011. A 2012 Arizona Court of Appeals decision in Sun Valley Ranch 308 LP v. Robson determined that a contractual agreement to arbitrate also extends to: (i) arbitration of claims arising out of a related contract that lacks an arbitration provision, (ii) non-contract claims so long as resolution of the claim requires reference to the contract, and (iii) non-signatories in certain circumstances. If the agreement to arbitrate is challenged, the court will decide whether the agreement to arbitrate is valid and whether the issue in dispute is subject to a binding agreement for arbitration.
About mediation in Arizona
Mediation is an informal process that helps parties resolve disputes through negotiation. An objective third party mediator is hired to assist the parties in reaching a settlement but does not have the authority to issue a binding decision. If a resolution cannot be found through mediation, the case may then proceed to trial.
Mediation is conducted in-person and in private, with your counsel and the opposing party. The two parties determine any final settlement decision with the assistance of the mediator. If an agreement is reached, it will typically be put into writing for the two parties to sign and then becomes a binding agreement between the parties. If no agreement is reached, the options are to continue with mediation, go to arbitration, or try the case in court.
At Mestaz Law we focus our efforts on representing your business interests throughout the duration of your case. When you need help that only an experienced business litigation attorney can offer you, contact Mestaz Law at (602) 806-2068.