COVID-19: FINAL OFFER ARBITRATION IS ONE SOLUTION FOR LITIGANTS

202005.08
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As state and federal court closures continue and pending civil trial dates vanish, arbitration, especially final offer arbitration, may emerge as an efficient, fair solution to a court backlog that is otherwise likely to increase massively.

What are the advantages of final offer arbitration?

  1. Firstly, in this form of arbitration, the arbitrator’s discretion is limited to selecting one of the litigants proposed arbitration awards. Not only does this eliminate the possibility of an aberrant award, but if the final offer format is accompanied by an abbreviated pre-award procedure, the entire expense of the arbitration may be significantly reduced. This would be particularly desirable in smaller dollar disputes.
  1. Final offer arbitration is also beneficial in more complex disputes because in addition to the above advantages, this arbitration method allows parties more control (and responsibility!) for crafting a desired decision as described below.
  1. The final offer scheme also requires a party to thoroughly anticipate the likely nature of the opponent’s proposed arbitration award.  In other words, parties are indirectly forced to be reasonable in their demands if they hope to persuade the arbitrator.
  1. Procedural details of final offer arbitration, especially the scope of pre-hearing discovery, can also be crafted to fit the controversy. This can be done cooperatively between counsel or determined jointly between the arbitrator and the parties’ attorneys.  The arbitration hearing can also be limited to oral argument if the parties so desire.
  1. Scheduling the arbitration and the procedural order is in the hands of both parties and the arbitrator if the parties cannot agree. This eliminates uncertainty and gives a definitive timeline of events prior to the arbitration decision. A procedural order should be in place at or near the inception of the arbitration.

Although final offer arbitration has existed in form for many years, it is only now that its popularity may grow exponentially.

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