By John K. Fulweiler
As a lawyer, my stage is crowded with both victories and losses. That’s the nature of the beast and the best I can hope is my victories continue to outnumber my losses. Most claims in the maritime sector that aren’t settled are resolved in litigation or arbitration. However, and like the occasional court decision, not every arbitration award will be an example of prosaic reasoning, but unlike a court decision, there’s rarely a meaningful appeal process by which to seek relief from being caught behind a shipwreck of an arbitration award. This circumstance, along with others, makes it important a party understand the pros and cons of agreeing to arbitration.
An arbitration is a private forum the parties agree to use to decide a dispute. Unlike mediation, the decision issued by the arbitrators (often referred to as an “arbitration award”) is typically binding on the parties absent a narrow set of circumstances such as when it can be shown the arbitrators exceeded their powers or where there was a manifest disregard of the law or if you can establish bias. From a practical perspective, because the threshold to overturn an arbitration award is so high, a party considering arbitration is probably best served by simply realizing an arbitration award is usually final and binding. End of story.
How the arbitration process will unfold is driven by the rules of the arbitration forum. In some instances, the arbitration will only involve written submissions which the arbitrators will use to base their decision. Sometimes, the parties submit written submissions and the arbitrators convene hearings at which to accept live testimony from various witnesses. In general, the rules of evidence are very relaxed in an arbitration forum, meaning what you believe is unreliable evidence may be considered by the arbitrators whereas it would not have been in a judicial setting. Likewise, the conduct of attorneys, in my personal opinion, is not as strictly regulated in an arbitration as it would be in a courtroom setting, which may allow for arguments and insinuations that could never be raised before a judge or jury.
Another consideration in electing to use arbitration is the arbitrators may be known and have involvement in the industry. This is particularly the case in maritime arbitration, where some of the maritime arbitration programs require the arbitrators possess maritime experience. One or both parties may find this is a positive factor as the conflict or circumstance may be better understood from someone, in the lexicon of the wordsmith L.L. Cool J, who is from ‘round the way’. Still, they’re probably good and convincing arguments against allowing someone from ‘round the way’ to rule on your maritime dispute when you hail from a different neighborhood.
The appellate process forces the trial court to explain its reasoning and get its facts right. Thus, while it’s easy to lose in grand form at the trial court level, it won’t likely be at the fickle whim of the judge. In not finding your witnesses credible and disagreeing with your law, the trial court judge will likely issue some form of explanation that, at a minimum, will give a party some measure of understanding as to where the claim got off the rails and may, sometimes, provide a basis by which to appeal. In my experience, not all arbitration outcomes are based on a fully formed opinion that would withstand the traditional appellate process.
Lots of times you’ll hear arbitration championed because it’s quicker and cheaper than the judicial process. Indeed, that may be the case. However, consideration should be given to fully understanding the time frame and costs of arbitration before pulling the trigger. Arbitration will always be good for certain claims and will always be able to trumpet certain inherent advantages over litigation, but after having paddled around in the arbitration waters for a long time, I’m increasingly circumspect. I query whether the ultimate costs of arbitration (both monetarily and otherwise) are, in fact, less than the judicial process.
The bottom line is before you elect to pursue arbitration, sit down with your admiralty attorney and have a real chat about the arbitration process and the arbitrators that may rule on your claim. You may decide the arbitration forum is a good fit, you may have good prior experiences with arbitration, and you may favor its streamlined approach to decision making. Whatever the case, the point is you should take the time to understand the pros and cons of arbitration before you toss the trial court over the side rail.
This article is provided for your general information, is not legal opinion and should not be relied upon. Always seek legal counsel to understand your rights and remedies.
Underway and making way.
Admiralty attorney John K. Fulweiler, Esq. practices maritime law on the East and Gulf Coasts. As a former partner of a Manhattan maritime firm, John now helms his own practice located in Newport, Rhode Island where he helps individuals and businesses navigate the choppy waters of the maritime law. John can be reached anytime at 1-800-383-MAYDAY (6293) or via e-mail at firstname.lastname@example.org.