Monday, 25 June 2012

Arbitration Definition

Arbitration Definition

            If a client and a broker have a disagreement they are not able to settle amicably, they can take the case to Arbitration. The process is started when a client files a statement of claim using a form provided on the FINRA website. It details the circumstances surrounding the dispute and what type of monetary award the client is hoping to obtain. 

       If the disputed dollar amount is under $25,000, it is resolved through written statements. For amounts over $25,000, in-person Arbitration is used. This requires the selection of a venue and the formation of an arbitration panel. 

          The claimant signs the "uniform submission agreement" stating they will abide by the panel's decision and they pay filing and hearing fees.


By their nature, the subject matter of some disputes is not capable of arbitration. In general, two groups of legal procedures cannot be subjected to arbitration:
  • Procedures which necessarily lead to a determination which the parties to the dispute may not enter into an agreement upon:Some court procedures lead to judgments which bind all members of the general public, or public authorities in their capacity as such, or third parties, or which are being conducted in the public interest. For example, until the 1980s, antitrust matters were not arbitrable in the United States. Matters relating to crimes, status and family law are generally not considered to be arbitrable, as the power of the parties to enter into an agreement upon these matters is at least restricted. 
  • However, most other disputes that involve private rights between two parties can be resolved using arbitration. In some disputes, parts of claims may be arbitrable and other parts not. For example, in a dispute over patent infringement, a determination of whether a patent has been infringed could be adjudicated upon by an arbitration tribunal, but the validity of a patent could not: As patents are subject to a system of public registration, an arbitral panel would have no power to order the relevant body to rectify any patent registration based upon its determination.
  • Some legal orders exclude or restrict the possibility of arbitration for reasons of the protection of weaker members of the public, e.g. consumers. 
  • Examples: German law excludes disputes over the rental of living space from any form of arbitration, while arbitration agreements with consumers are only considered valid if they are signed by either party, and if the signed document does not bear any other content than the arbitration agreement.

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