Before You Sue — Read This A Look at the American Arbitration Association

Filing a lawsuit as any co-op or condo resident that’s been involved in one can attest, is not only very time-consuming and expensive, but equally unnnerving and contentious. A much saner solution to settle any acrimonious dispute is to consider settling the matter without setting foot into the courtroom. That is where organizations like the American Arbitration Association can help.

A quick perusal of the definitions of the word "arbitration" in the context of United States law explains the term as "a form of alternative dispute resolution, a legal alternative to litigation whereby the parties to a dispute agree to submit their respective positions (through agreement or hearing) to a neutral third party (the arbitrator(s) or arbiter(s)) for resolution. In practice, arbitration is generally used as a substitute for judicial systems, particularly when the judicial processes are viewed as too slow, expensive or biased. “

Putting that definition into practice is the raison d'etre of the AAA. The not-for-profit organization, was founded in 1926, following enactment of the Federal Arbitration Act, a statute that provides for judicial facilitation of private dispute resolution through arbitration, giving parties at odds an alternative to heading straight to court.

Their Mission

In their own words, the AAA "provides services to individuals and organizations who wish to resolve conflicts out of court. The AAA’s role in the dispute resolution process is to administer cases, from filing to closing. The AAA's administrative services include assisting in the appointment of mediators and arbitrators, setting hearings, and providing users with information on dispute resolution options, including settlement through mediation. Ultimately, the AAA aims to move cases through arbitration or mediation in a fair and impartial manner until completion,” according to its mission statement.

The American Arbitration Association defines arbitration in relation to the work they do as a “time-tested, cost-effective alternative to litigation.” In arbitration, the dispute is submitted to one or more impartial persons for a final and binding decision, known as an 'award.' Awards are made in writing and are generally final and binding on the parties in the case. The primary difference between arbitration and a lawsuit is essentially the degree of formality used by the people involved. Arbitration was actually here first: the Egyptians, Greeks, and Romans all resolved conflicts using the arbitration method before instituting a formal court system. Mediation and negotiation, other forms of ADR, are similar to arbitration in terms of process, except that the decisions made in those processes are usually non-binding.

According to Wayne Kessler, AAA’s vice president of corporate communications, the organization “was founded with the specific goal of helping to implement arbitration as an out-of-court solution to resolving disputes.” The legal framework was passed by Congress and signed by President Calvin Coolidge. As such, the AAA's official mission statement and vision statement are based on three core values: integrity, conflict management, and service.

To fulfill its mission, Kessler notes that the AAA maintains a national roster of over 8,000 impartial experts or arbiters, “neutral” parties who hear and resolve filed cases. Neutrals are attorneys as well as non-attorneys, Kessler says, and they are people, who are recognized for their standing and expertise in their fields. They are nominated to the roster by leaders in their industry or profession. Their collective expertise is wide-ranging; all have at least a decade of industry-specific expertise in areas like construction, employment, health care, real estate, and technology to name just a few, he adds.

Cost-Effective and Ethical

In a co-op or condo setting, arbitration can be an attractive alternative. In some states like New Jersey, for example, ADR is required prior to proceeding down any litigation route.

While many lawyers will argue that arbitration isn’t really a cost-effective alternative to litigation, the numbers show that it is. In fact, perhaps the most appealing aspect of ADR for most people is the difference in cost. According to David B. Schachter, a Jackson Heights-based attorney who specializes in residential and commercial real estate law, the average housing-related lawsuit can cost anywhere from several hundred dollars to as much as $5,000—and that’s just the average. Hiring a professional mediator or arbitrator, however, whose hourly rates can be as little as $75, can cut costs drastically.

Another benefit of using an organization like AAA, claims Kessler, is that its mediators are held to a strict code of ethics and the group has model standards of conduct in place to ensure fairness and impartiality in conflict management. The AAA is dedicated to its core values and also to promoting education, particularly in the field of alternative dispute resolution.

“The conduct of AAA arbitrators is regulated by codes of ethics that have been jointly developed with organizations including the American Bar Association (ABA) and the National Academy of Arbitrators," Kessler states. "Mediators must comply with model standards of conduct jointly developed by the AAA, the ABA and the National Association for Conflict Resolution.”

The organization adheres to and provides numerous rigorous protocols and principles for settling all types of disagreements and grievances, including many that are of great interest to condo communities and homeowners associations, such as employment and salary disputes, due process arguments, and debt collection.

A Worldwide Presence

The association’s headquarters are located in New York City, though the group has regional sales and service offices throughout the United States. Case management centers (including domestic, international, labor and state insurance case management) are located throughout the country. Part of the AAA’s jurisdiction includes the International Centre for Dispute Resolution (ICDR) which handles resolution needs outside the United States, primarily in Europe, the Middle East, Africa, Asia, Mexico and Canada.

The AAA provides a simplified filing process for each case and then directs the case to the correct department by an expert intake team. To reduce the cost of in-person meetings, the AAA, says Kessler, also provides video conferencing and their website provides instruction for online case filing and user feedback. Alternatively, cases may also be filed through the AAA's offices nationwide, which are staffed by professional case managers.

The AAA also continues its shared mission to diversity by creating and launching programs such as the A. Leon Higginbotham, Jr. Fellows Program.

In its 2009 inaugural year, the program selected 15 fellows from more than 85 applicants from law firms, government agencies and ADR firms across the country. The AAA established this program to help increase the inclusiveness of the ADR field by reaching out to women, persons of color and others who historically have not had the opportunity for meaningful participation in the field.

In May 2009, the fellows attended a training program on arbitration and mediation at the AAA’s New York headquarters, learning from and interacting with AAA staff and neutrals who served as guest speakers and resources. Each fellow was also matched with an AAA neutral who will act as a mentor as they continue to develop their career in ADR.

After 85 years of helping disputing parties avoid the expense and acrimony of litigation, Kessler says the American Arbitration Association is proud of its accomplishments and looks forward to a bright future.

In a 2010 letter to members and associates, President and Chief Executive Officer William K. Slate said, “In 2009, the American Arbitration Association, like many businesses and organizations, faced a challenging economic environment with the pragmatism demanded by the times. The AAA expanded customer services while being mindful of operating expenses. We identified and leveraged new growth opportunities—such as the vibrant international arena,” Slate said. “We also continued to boost our educational programs, helping neutrals to enhance their already rich knowledge and experience while also providing knowledge to customers seeking alternative dispute resolution services. Like a river flowing to the ocean, the AAA maintained a steady, deliberate course, never stopping, always moving ahead.”

Rebecca Fons is a freelance writer and educator living in Chicago, Illinois.

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  • this is a joke - there is nothing fast about arbitration - it is akin to Dilbert cartoon episodes - an arbitrator gets paid to have a meeting about when the parties should have another meeting. It is ridiculous... meanwhile parties are not only paying the arbitrator, they are paying their attorney for such pointless engagements. There is no hurry to move along since they get paid; there is no hurry to make a decision on even the most trivial matters. The fact that is is fast and cheaper is a myth-- perpetuated by whom? the AAA themselves! The AAA's representatives present the same to collect fees. I have removed arbitration clauses from all my contracts. i find it to be exactly what it says "Arbitrary" or something more sinister, biased ...they don't follow even their own rules; a fairly incompetent association that makes no apologies for it. They represent mediocrity in the legal community at best but seek top fees for it. You are better to stick to a panel of your peers "jury" or an elected judge -- who usually has an interest in at least moving a case along (not getting paid to prolong it!). People just don't listen - Supreme Court justice, Sandra Day O'Connor warned the country of the huge issues of arbitration.