What Is Arbitration and What Should You Expect from It?

Arbitration may sound mysterious to some, but it is a relatively straightforward process. Arbitration is a form of dispute resolution and is an alternative to litigation (going to court). Less formal, less costly, and less time-consuming than litigation, arbitration is an attractive option for parties who want an easy and efficient way to resolve a dispute.  

In some cases, a process called mediation will precede arbitration. For example, when a consumer begins working with the BBB AUTO LINE team to resolve a vehicle warranty or lemon law dispute, a dispute resolution specialist will work directly with both the consumer and the manufacturer in an effort to resolve the dispute through mediation. In fact, more than 60% of claims that come through AUTO LINE are resolved in mediation. But, if a dispute cannot be resolved in mediation, the claim will proceed to arbitration. 

Some of the mechanics of arbitration are comparable to litigation, such as a trial or court hearing in which each side of a dispute gets to present their side, which includes presenting evidence and testimony. But, unlike litigation, there are no formal rules of evidence, which makes it much less burdensome on the parties.

Also similar to a court hearing, there will be a “judge” evaluating each party’s side and, ultimately, making a decision on the matter. This individual is called an arbitrator. They are a neutral third-party who is usually a lawyer or someone with expertise in the matter being arbitrated. For example, an AUTO LINE arbitrator might have experience in the automotive industry.  

Arbitration hearings can be held in-person at a neutral location, virtually via teleconference, or “in-writing,” where the parties present their sides through documents only. If the hearing is conducted in-person or virtually, each party will have the opportunity to present their side orally, which includes testifying or even calling witnesses. The arbitrator will likely ask questions of the parties, too. Arbitration hearings commonly take about 60 – 90 minutes.  

After the hearing concludes and the arbitrator has had an opportunity to evaluate the case, the arbitrator will issue a written decision, in which they will decide the matter in favor of one of the parties. In the decision, the arbitrator will explain their reason for reaching the decision and may award a remedy to the prevailing party, such as reimbursement for their vehicle that was deemed a lemon. 

An arbitration award is usually binding on both parties but, in the case of BBB AUTO LINE, the consumer has the choice to accept or reject the decision. If the consumer chooses to accept the decision, it is binding on the manufacturer, meaning the manufacturer must comply with the remedy ordered by the arbitrator. If the consumer chooses to reject the decision, the case is closed with no further action. 

If you believe you have a claim eligible for arbitration under the BBB AUTO LINE program, you can get more information by going to the BBB AUTO LINE webpage for consumers so we can help you determine eligibility and navigate the claim process.