The panic in the voice of my client when she called me last Tuesday is a memory I will never forget. There is a frightening letter here about arbitration, she said. “Does this mean I’m being sued?”
This does occur more frequently than you would imagine. The majority did not know what they meant or what to do next.
I will explain this to you in simple terms.
What Is a Notice of Arbitration?
Consider arbitration to be a courtroom of its own. Rather than appearing in a court of justice before the general population, both parties sit before an impartial individual (also known as an arbitrator) who listens to the case and renders an official verdict.
This process is initiated by a Notice of Arbitration. And it feels like being served a lawsuit, only that the case will not be conducted in a conventional court.
Here’s what makes arbitration different from regular court:
- Speed: Cases usually wrap up in 6-12 months instead of 2-3 years
- Privacy: Your case stays out of public records
- Cost: Can be cheaper (but not always)
- Finality: You typically can’t appeal the decision
Why You Got This Notice
The majority find themselves in arbitration because they signed an agreement that had an arbitration clause. You may not have realized it then.
Common places these clauses hide:
- Employment contracts
- Credit card agreements
- Cell phone plans
- Gym memberships
- Nursing home contracts
- Consumer purchases (especially electronics)
You go to purchase an automobile. On page 12 of his financing agreement was an arbitration clause, which was buried. Three months later, when the engine malfunctioned, you were unable to take the dealership to court. He was forced to undergo arbitration.
What the Notice Contains
Every Notice of Arbitration should include:
The Claimant: Who’s bringing the case against you
The Claim: What they say you did wrong
The Relief Sought: What they want (usually money)
The Arbitration Rules: Which organization will handle the case (like the American Arbitration Association or JAMS)
Deadline to Respond: When you must file your answer
That last part is critical. Miss the deadline and you might lose automatically.
Your First 48 Hours: What to Do Right Now
I once worked as a paralegal, and my Senior used to say, time and again, in relation to an arbitration notice, treat it like a house fire. You don’t have time to waste.
Step 1: Check the Response Deadline
Look for language like “You must respond within 30 days of receipt” or “Answer due by [date].”
Put this date in your phone. Set three reminders. Write it on your bathroom mirror if you have to.
Step 2: Read the Entire Notice
I know it’s boring. I know it’s full of legal language. Read it anyway.
Pay special attention to:
- What they claim you owe
- What contract or agreement they reference
- Any supporting documents attached
Step 3: Gather Your Documents
Find anything related to the claim:
- Contracts or agreements
- Emails or text messages
- Receipts or invoices
- Photos or videos
- Witness contact information
A lady had to lose a couple of thousand dollars due to throwing away her initial contract. It took her three weeks to find a copy in the archives of the vendor.
Step 4: Contact a Lawyer
Yes, arbitration is not so formal as court. No, it does not imply that you have to go on your own.
Free consultations are provided by most lawyers. Use them. You can save thousands of dollars even in 30 minutes with an experienced attorney.
If you can’t afford a lawyer, look for:
- Legal aid societies in your area
- Law school clinics
- Bar association referral services with sliding fee scales
Common Mistakes That Cost People Cases
Ignoring the Notice
This is the largest error I can discern. Individuals believe that by turning a blind eye to them, they will disappear.
This is the largest error I can discern. Individuals believe that by turning a blind eye to them, they will disappear.
It won’t.
Without you, the arbitration will go on. The arbitrator will listen to the other side of the story only. You’ll lose by default.
A former paralegal had merely put the notice in the file. The deadline had elapsed by the time anybody noticed. It required an emergency motion to reopen the case. It took the client an additional thousand dollars in litigation.
Talking to the Other Side
Don’t call them. Don’t email them. Don’t try to “work it out.”
What you say against you is admissible in the arbitration. I have observed individuals unknowingly acknowledge liability in their efforts to be helpful.
If they contact you, politely say you’ll have your lawyer respond. Then hang up. If you’re dealing with harassment or false claims, you might need to send a cease and desist letter to stop the other party from contacting you directly.
Posting on Social Media
That frustrated Facebook post about your “ridiculous arbitration” could become Exhibit A for the other side.
Stop posting about:
- The case
- The other party
- Your feelings about what happened
- Any facts related to the dispute
Set your accounts to private. Better yet, take a social media break until the case ends.
If the other party is posting false information about you online, that’s a different matter. You might need to explore how to send a defamation notice to protect your reputation.
Throwing Away Evidence
Keep everything. I mean everything.
That e-mail that you believe makes you look bad? Keep it. The arbitrator prefers honest evidence than finding out that you concealed something.
The destruction of evidence may lead to punishment. The arbitrator may even decide against you automatically in certain situations.
The Arbitration Process: What Comes Next
Once you file your response, here’s the typical timeline:
Weeks 1-4: Initial disclosures and document exchange
Weeks 4-12: Discovery (requesting information from the other side)
Weeks 12-20: Depositions (recorded interviews under oath)
Week 20-24: Pre-hearing briefs and witness lists
Week 24-28: The hearing itself
Week 28-32: Arbitrator’s decision
These timelines vary based on case complexity and the arbitration organization’s rules.
Can You Get Out of Arbitration?
Sometimes, but it’s hard.
Courts have found arbitration clauses unenforceable when:
The clause is unconscionable: So one-sided it shocks the conscience
You never agreed to it: No valid contract exists
The claim involves certain rights: Some employment discrimination claims can bypass arbitration
The other party waived arbitration: They sued you in court first, for example
Many arbitration clauses appear in contracts you sign without reading carefully. Similar issues come up with terms and conditions updates and privacy policy changes that companies slip into your inbox. These updates can affect your legal rights, including how disputes get resolved.
Understanding Related Legal Notices
While dealing with your arbitration notice, you might encounter other legal documents. Here’s how they differ:
Notice of Intent to Sue: This comes before a lawsuit and gives you a chance to settle. If you receive one, check out our guide on how to respond to a notice of intent to sue to protect yourself.
Notice of Dispute: Less formal than arbitration, this document asks you to resolve a conflict before legal action starts. Learn more about responding to a notice of dispute so you don’t get ignored.
Debt Collection Notice: Many debt collectors try to use arbitration to collect money. Before you pay anything, read about the steps to take when you get a debt collection notice to make sure you actually owe the debt.
Questions People Ask Me All the Time
“Can I represent myself?”
Legally? Yes. Practically? I wouldn’t recommend it.
The opposition will probably have an attorney. Arbitrators tend to be just as demanding of self-represented parties as they are of attorneys. There is the risk of involuntarily forfeiting key rights.
“Will this affect my credit?”
It will not reflect on your credit report because of the arbitration itself. but when the arbitrator goes against you and you refuse to pay, the creditor may turn the debt to collections or have a court enforce the arbitration award.
“Can I record the hearing?”
Not without the consent of the arbitrator and the other party. The majority of arbitration regulations do not allow recording unless all parties consent.
“What if I can’t afford to pay the arbitrator’s fees?”
Make a motion to waive fees or have the other party pay the fees. Arbitrators usually give such requests when the case is strong and limited on resources.
“Can I bring witnesses?”
Yes. Early inform your lawyer about the possible witnesses. They will take time preparing testimony and probably subpoena.
“What if the dispute involves a defective product?”
Product defect cases in arbitration can be tricky. If your claim involves a warranty, make sure you understand how warranty claims work before the hearing. Many companies use arbitration clauses to limit warranty disputes.
How to Prepare for the Hearing
The hearing is your chance to tell your story. Here’s how to make it count:
Three weeks before: Review all documents with your lawyer. Identify weak points in your case.
Two weeks before: Practice your testimony. Your lawyer should run you through likely questions.
One week before: Organize exhibits in binders. Tab and number everything.
Night before: Get sleep. Seriously. I’ve watched exhausted witnesses make terrible mistakes.
Day of: Dress professionally (business casual at minimum). Arrive 15 minutes early. Bring water and snacks.
In testifying, be straightforward and clear. In case you do not comprehend something, indicate it. Never guess at answers.
A client lost credibility after he gave an estimated date which did not match documentation evidence. He might have just indicated that he did not remember the exact date but the invoice would indicate it.
After the Decision
The arbitrator will present a written award, which is normally within 30 days of the hearing.
If you win, congratulations. The other party is bound too or you may request a court to enforce the award.
If you lose, you have very limited options to challenge the decision. Courts will only overturn arbitration awards for:
- Fraud or corruption
- Arbitrator bias
- Arbitrator exceeding their authority
- Violation of public policy
It is not because an arbitrator was in error that they may appeal. This is one of the reasons why arbitration is speedy compared to litigation.
What I Wish Everyone Knew
Five years in this profession, my sincere opinion is:
Arbitration is not necessarily good or bad. It is merely different than court.
You may receive a just hearing and fair case. You may be tempted to believe that the process was biased towards the arbitration clause writing company. It is not often that the forum takes precedence over the strength of your case.
Don’t let fear paralyze you. That Notice of Arbitration is severe, but it is not the end of the world.
Take it seriously. Meet your deadlines. Get professional help. Present your case clearly.
Above all, do not allow anyone to tell you that arbitration is a way of saying that you have already lost. I have won cases when my clients were in no way sure of victory. I have also witnessed good cases being lost due to a lack of preparation by people.
The distinction typically boils down to three factors, namely preparation, documentation, and credible testimony.You got this. Begin with the first step, and go on.
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