As with anything, arbitration is good and bad.  As a Plaintiff/Claimant, the good is you may have a “final” hearing sooner than with many state courts.  The good includes less stress for the attorney’s because arbitrators tend to use common sense and be informal and the attorney fees probably are less than in “real court”.  The bad is no right to appeal, the substantive decision is usually final and you pay tens of thousands of dollars in costs for the arbitration.  As a Defendant/Respondent, demanding arbitration opens a door to an early settlement discussion because the Plaintiff won’t want to spend the money on an arbitration.  For the law how that benefits you, keep reading …

All arbitration companies have their own “rules”.  They cover a variety of procedures the parties follow.  They cover administrative and substantive issues how to conduct the arbitration.  For example, ADR Services has a Rule 43 that essentially states  if one party does not pay its share of fees, then the the other party can pay all of the arbitration costs, and the arbitrator has discretion to now allow affirmative relief or put forth evidence of defense.  The problem is that is illegal under California law.  Code of Civil Procedure § 1286.2 also allows an award to be vacated “ by the refusal of the arbitrators to hear evidence material to the controversy”.

Where arbitrators are required by the terms of submission to determine a matter according to law, a failure to so determine is sufficient ground to avoid the award.  Utah Const. Co. v. Western Pac. Ry. Co. (1916) 174 Cal. 156.

I have other blog posts here on this issue, it is clear “California’s long-standing public policy of ensuring that all litigants have access to the justice system for resolution of their grievances, without regard to their financial means.”  “when a party who has engaged in arbitration in good faith is unable to afford to continue in such a forum, that party may seek relief from the superior court.”

As stated in Aronow v. Superior Court (2022) 76 Cal.App.5th 865, 879 , “What we can do, however, is give [the defendant law firm] a choice: if the trial court determines that any of these plaintiffs is unable to share in the cost of arbitration, [the firm] can elect to either pay that plaintiff’s share of the arbitration cost and remain in arbitration or waive its right to arbitrate that plaintiff’s claim.’ And held “Supported by a wealth of jurisprudence, we conclude the trial court has jurisdiction to address Aronow’s request and, if he demonstrates financial inability to pay the anticipated arbitration costs, to require Emergent either to pay Aronow’s share of the arbitrator’s fee or to waive the right to arbitration.” (Aronow v. Superior Court (2022) 76 Cal.App.5th 865, 885.

Another hint, is read your arbitration clause.  E.g. CAR does not require a particular set of “rules” to be followed.  Did the arbitration company make an affirmative (not click wrap) requirement for the parties to agree to “their rules”.  Usually the only thing an arbitrator does is ask do you want to follow the CCP or modify them.

By example, AAA, JAMS, Signature Resolution all allow a non-paying defendant to still present a defense.  ADR Services is a wonderful company, with many amazing arbitrators, but I suspect in the very near future (due to “moi”) they will be updating their rules to comply with the law.

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Continue Reading Killer Arbitration Secrets … It’s all about the money…