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What is Arbitration?

What is Arbitration?

Arbitration is one of many forms of Alternative Dispute Resolution (ADR). Arbitration can be an alternative to filing a lawsuit in court. Arbitration can be voluntary or it mandatory and in some cases it can even be a prerequisite to filing a lawsuit. Arbitration can be binding, meaning the parties agree that the arbitration award will be final, or it can be non-binding, meaning the parties can still pursue other available remedies (such as a lawsuit in court) after the arbitration has concluded. Arbitration can offer a means to settle a dispute in a more streamlined manner without getting bogged down in the Court System.

As stated above, arbitration can be voluntary or mandatory. Arizona Revised Statute §12-133 sets forth the requirements for compulsory arbitration prior to proceeding with a lawsuit. Specifically, A.R.S. §12-133 states that the superior court, by rule of court, shall do both of the following: (1) Establish jurisdictional limits of not to exceed sixty-five thousand dollars for submission of disputes to arbitration; and (2) Require arbitration in all cases which are filed in superior court in which the court finds or the parties agree that the amount in controversy does not exceed the jurisdictional limit. Essentially this means that if the claim is for money, and the amount is less than $65,000, then the parties must arbitrate. However, this requirement can be waived on a showing of good cause if the parties agree to it.

Arbitration can also be voluntary, meaning that the parties in the dispute agree to proceed to arbitration rather than go right to court. Some advantages of arbitration are that it is a less formal process then court, it generally takes less time and it generally saves the parties money. Of course there are exceptions to that, but the point of Arbitration, and ADR in general is to give people an effective and less burdensome means of resolving their disputes. Arbitration can also be required by various types of contracts. For example, in Arizona, most residential real estate contracts require that parties arbitrate any disputes arising out of the contract, rather than litigate them.

The Rules of Arbitration can vary depending on who is conducting the arbitration. Many contracts provide that the Arbitration will follow the rules of the American Arbitration Association (AAA). Generally, if there is a dispute, the party wanting to initiate the arbitration will send written notice to the other party, or parties, of that intent. In some instances, if the other party fails to reply, this can be seen as a waiver of the requirement of arbitration and the party initiating the dispute may be able to proceed directly to litigation if they choose. If the other party agrees to the arbitration however, then they will proceed to choose an arbitrator. Depending on what arbitrator, or organization is chosen, there will be costs associated with this. Once an arbitrator s chosen, that arbitrator will generally send out the rules and procedures to be followed for the arbitration.

The arbitration itself is not entirely dissimilar to a lawsuit. Each party will be given a chance to present their story, along with any evidence, documents or witnesses that support it. The arbitrator will listen to all parties and then decide which party will prevail. The arbitrator could decide on the day of the hearing, but generally they will issue a decision after the hearing. Once a decision has been reached, each party may have a set amount of time to appeal the decision, or the decision will become final. In the case of binding arbitration, the ability to appeal may not be available.


Arbitration can be an effective way to resolve a dispute while avoiding a lengthy litigation process. If you have been served a notice requesting arbitration, or you would like to serve the notice on someone else, it is important to talk with an experienced attorney regarding all available options before deciding. Platt & Westby has offices in Phoenix, Arrowhead, Litchfield Park, Scottsdale and Gilbert Arizona.  Contact our office by calling 602-277-4441 or visit to schedule a consultation with one of our experienced attorneys.


Written by: Kent Millward