ities arbitrations, the American Arbitration Association (AAA), a non-profit organization headquartered in New York City, defines an arbitration as "the voluntary submission of a dispute to an impartial person or persons for final and binding arbitration" (American Arbitration Association, 1992, p. 1). Unless their award is overturned by the courts, binding arbitration is just that--the award of the arbitrators has the force of law. In a binding arbitration, the corporate or other parties to a commercial dispute agree by contract to submit their dispute to arbitration. A typical AAA dispute submission clause reads as follows:
"Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be settled by the
American Arbitration Association under its Commercial
Arbitration Rules, and the judgment on the award rendered
by the arbitrator(s) may be entered in any court having
jurisdiction thereof" (American Arbitration Association, 1992, p. 2).
Some arbitrations are by agreement of the parties non-binding. For example, in cases where there is no agreement for binding arbitration and in which the amount in controversy is less than $50,000, the parties may be ordered to submit to arbitration by civil courts in the State of California. The arbitrator's award is final and binding courts, unless one of the parties to the dispute requests a trial de novo within 30 days after the arbitration award has been filed with the Court (California Rules of Court, 1996, Rules 1600 and 1616). Arbitrators are typically drawn from a panel of neutrals proposed by an arbitration organization, such as the AAA, or may be private arbitrators selected by the parties. In small disputes, single arbitrators are chosen, but in larger disputes, the typical arbitration panel consists of three arbitrators, who, depending on the terms of the arbitration agreement may all be selected as neutrals by ...