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Posted on Jan 27, 2014 in Consumer Protection, Legal Process, Podcast | 4 comments

019 – My trip to the car dealership and an Arbitration Agreement

019 – My trip to the car dealership and an Arbitration Agreement


Last week my wife made an appointment for me to take her car to have it serviced – the normal oil change, tire rotation bit.  This happens to be one of my least favorite chores to handle.  It usually takes a lot longer than the tech predicts and without fail they generally find something else that “needs attention.”

Well, when I arrived at the dealership I was greeted by a customer service rep in the service department and told her who I was and that I had a service appointment. She quickly printed out the forms, told me what to expect and asked for me to initial and sign a couple of forms that ordered the work on the vehicle.  Then, she asked me to sign an arbitration agreement.  While reviewing it she informed me that, “this is just a form that is used so if we can’t come to terms on something we will meet with a mediator to resolve our dispute.”  As I sat in the waiting room for a couple of hours I heard other customer service reps give this same line to other customers. 

So what is arbitration?

Arbitration is a form of dispute resolution. The easiest way to describe arbitration is to compare it to having a private judge or group of judges.  Arbitration is contrasted to going to court in that you do not have to go through a lengthy litigation process and leave your case up to a judge or jury.

There are a few advantages to arbitration over the regular process.  Some of those are:

Judge Shopping – in a court action you are stuck with the elected or appointed judge.  You don’t get to decide or shop your case around.  With arbitration you are able to choose the person who will be deciding your case.

Speed – The court process is lengthy in large part to the overcrowded court docket.  There are only so many judges and so many hours in the day.  With arbitration you can schedule your case to be heard as quickly as the parties can get ready and coordinate it with all lawyers and the arbitrator.

Privacy – If you file your case in a civil court, it is most likely going to be heard in open, public court.  So anyone could stop in and listen to the proceedings.  Depending on who you or the opposing party are, you could also expect to see press present at the hearing.  In contrast, an arbitration meeting is private.

Depending on the side you are on this next one could be a pro or con.  In general, you will have no appeal rights from the arbitrator’s decision.  This can be set out in the arbitration agreement, but you may not have the automatic right of appeal as you would if a judge decided your case.

Another negative is the cost – Sine your arbitrator is essentially a private judge you and the opposing party will be footing the bill instead of the taxpayers.  These fees can be thousands of dollars – especially for more complex cases.

The arbitration process…

The process is similar to that of regular litigation, with a few tweaks.  First, the parties will outline the contested issues and discovery can be done.  Discovery is an exchange of information critical to the case by the contesting parties.  From there, an arbitrator will be chosen and the arbitration meeting will be scheduled.  The meeting will be similar to a court trial, but slightly more relaxed.  The rules of evidence will lightly apply and rather than being in a court room you will likely be in a conference room.  The parties will make their cases by calling witnesses and presenting evidence.  Finally, the arbitrator will make his decision and the case will end.

Let’s also clarify another comment customer service rep made.  She mentioned that if we could not come to terms we would attend arbitration where a mediator would help us resolve the case.  Arbitration is not where a mediator helps us resolve our case.  That’s mediation.  Mediation is a totally different process.  Mediation is also a dispute resolution service, but rather than having a third party listen to the case like a judge and make a decision – you are actually trying to avoid that scenario by attending mediation.  A mediator is also a neutral third party, but their job is to help you and the opposing party reach an agreement on your own without the need for someone to tell you what the outcome is going to be.

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