Are Arbitration Clauses Enforceable in Washington State?

October 24, 2022

Are you in a dispute with someone else? If you think your only recourse for settling your dispute is going to court, you should know there are other options available to you. You don’t always have to go to court to settle disputes. In fact, alternative methods may be more effective for settling the matter to your satisfaction.

Alternative Dispute Resolution

Have you heard the term alternative dispute resolution? An alternative dispute resolution process helps people to resolve disputes without going to court. The advantage to an alternative dispute resolution is that it often costs less than traditional litigation, and you can solve the matter quicker.

There are two main kinds of alternative dispute resolution. Those are mediation and arbitration. The two processes have some similarities as well as some differences.

For example, both are overseen by a neutral third party. Mediation is voluntary and non-binding. The resolution to the dispute is created to meet the needs of both parties. The mediator doesn’t serve as a judge but rather as someone helping to identify issues and facilitate a mutually acceptable agreement.

Attorneys can be present for mediation or arbitration proceedings. For mediation, they aren’t one of the principal participants. They act more as an observer who helps ensure their client understands the process and how the resolution will affect them.

On the other hand, arbitration is overseen by a neutral third party who decides how the dispute will be resolved. Arbitration is our focus today. Let’s start with defining arbitration.

What is Arbitration?

Arbitration is a legal procedure in which the parties of a dispute agree to submit their disagreement to be decided by arbitrators rather than going to court. Arbitration is a private dispute resolution process while going to court is a public dispute resolution process. There are some key things to remember about arbitration.

  1. Both parties must agree to arbitration. If it’s a contractual arbitration, there must be a relevant and valid arbitration clause in the contract. Once both parties agree to arbitration, one of them cannot unilaterally withdraw from the process.
  2. Arbitration is meant to be a neutral process. The arbitrator is supposed to be an impartial party who settles the dispute, not someone backing one party or the other.
  3. Arbitration is meant to be confidential. Anything disclosed in arbitration is meant to remain confidential even after the arbitration is completed.
  4. The decision reached by the arbitrator is binding, and the parties agree to abide by the decision. Only limited circumstances allow for the arbitrator’s decision to be overturned by the courts.

In Washington State, if the county has a population of 70,000 or more people, the superior court may require the parties to participate in mandatory arbitration. Typically, arbitration is ordered when the only award requested is a monetary one. Mandatory arbitration is overseen by the court system. Washington State law states that mandatory arbitration can only be used for settling disputes of amounts that are $35,000 or less.

Arbitration is often used in divorce proceedings in Washington State. Arbitrators can help decide one issue or multiple ones. Typically, arbitration is less stressful for the parties involved than going to court would be.

Arbitration isn’t the right solution method for everyone. Many couples don’t require the level of intervention imposed by arbitration, while others need the more stringent terms of a court order. However, there are a couple of benefits of arbitration that tend to lead couples to try it.

  • Arbitration is usually a less formal proceeding than a court hearing. You can decide if you want a conference room feel or a private court hearing feel.
  • The arbitrator is trained to help you resolve your issues. In contrast, a judge will rule on your case based on their perception and interpretation of the law that applies to your dispute.
  • Arbitration is private. If you want your privacy protected for any reason, you’re well-known in your community, for example, then arbitration could be a good choice for you. Divorce records are usually public records, but arbitration records aren’t. If there are any sensitive issues you are attempting to resolve, then arbitration might be right for you.

Arbitration tends to be more flexible than court proceedings. Rather than waiting months or longer to be worked into a crowded docket, those participating in arbitration can often get it scheduled around their own schedules with less hassle.

Rules of evidence are different for arbitration as well. Arbitration completely does away with discovery. There won’t be any lengthy interrogatories to answer, depositions, or requests to produce particular documentary evidence. Many times, matters such as lining up witnesses or determining which documents should be presented are handled with a phone call rather than via a process server.

Arbitration is usually faster than a court proceeding. Trials can take from 18 months to three years to make it through the court system, even in the best of circumstances. On the other hand, arbitration takes, on average, 475 days from filing the case to the decision.

Then there’s the cost of arbitration. Even though the costs of arbitration have been inching upward in recent years, it can still be much less expensive than the cost of litigation. The process is less complicated and generally faster, which means that the overall costs are less, even with hiring attorneys and paying the arbitrator.

Arbitration proceedings are generally less hostile than actual litigation proceedings. In many arbitration cases, the participants are encouraged to participate fully in the process, and they are often asked to help structure the settlement. The cooperative nature of the proceedings means that the parties involved are more likely to work together rather than become hostile toward each other.

Of course, there are some drawbacks to arbitration, along with the positives. For example, a binding arbitration decision can be challenging to handle, and often you aren’t allowed to take the grievance to court once you’ve been through arbitration. Additionally, some arbitration participants worry that arbitration can be one-sided or that the arbitrator won’t be objective.

How Arbitration Works in Washington State

Since divorce proceedings are often handled in arbitration in Washington State, let’s look at how that process works.

First, you and your spouse must agree to the arbitration. You must further agree to abide by the arbitrator’s ruling on the issues you bring to arbitration for resolution. In divorce cases, that could mean you are arbitrating one issue, or it could mean you are arbitrating several issues.

You and your spouse should retain separate arbitration attorneys. Your attorney will help you through the process and will help you negotiate an acceptable settlement.

Depending on how complex your case is, you could have one arbitration hearing or a series of them. Regardless of how many arbitration hearings you have, your attorney will present the arguments of your case to the arbitrator.

The arbitrator will listen to both sides of the case. Then, they will try to help you find a compromise between your and your soon-to-be ex-spouse’s viewpoints. Before any decisions are made, the arbitrator will work to help you find solutions that work for you both.

When you settle your dispute and decide what the final settlement will be, the arbitrator will sign off on it and present it to the judge. The judge will approve your settlement. Once it’s approved by the judge, it becomes a legal judgment of the court.

Is Arbitration Enforceable in Washington State?

Generally speaking, state and federal law favor arbitration as a dispute resolution process. If one party to the dispute doesn’t believe an arbitration clause in a contract is enforceable, that party holds the burden of proving the clause is unenforceable.

The Federal Arbitration Act (FAA) holds that arbitration agreements can be invalidated based on legal grounds such as unconscionability or fraud. Courts have used that clause in the FAA to hold arbitration agreements that violate state unconscionability principles as being unenforceable. Courts in Washington State have held that any arbitration agreement that keeps an individual from exercising statutory rights cannot be enforced.

Binding vs. Nonbinding Arbitration Proceedings

There are two forms that arbitration proceedings take: binding and nonbinding. In binding arbitration, the decision made by the arbitrator is considered final. The decision can’t be reviewed or overturned by a court unless there is a specific set of circumstances involved. Arbitration must have been found to be fraudulent or must have been subject to a misuse of power for it to be overturned in a binding arbitration proceeding.

Nonbinding arbitration is different. In nonbinding arbitration, either person involved can reject the settlement and request a trial. Many times people look at a nonbinding arbitration decision as a way to evaluate the merits of a case before going to court. In a nonbinding case, the agreement typically states that the award becomes binding if the parties agree or if they wait an extended period before requesting a return to court.

Closing Thoughts

Arbitration is one of the alternative dispute resolution methods available to people who want to avoid litigation. When you are contemplating arbitration in Washington State, it’s important to have a qualified attorney to help you through the process. Contact the attorneys at the Aberdeen Law Firm to see how they can help you navigate the process of arbitration.

Related Content: Who Pays for Arbitration in Washington State?

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