Choosing the Right Aribitrator in Business and Employment Contractual Disputes

Arbitration provides a host of benefits to business for the resolution of disputes. It is typically less expensive. It generally is quicker. The parties have more control over hearing and other dates which otherwise can negatively impact the parties’ business schedules.

For most Massachusetts business lawyers and their respective clients, these are powerful incentives to go the arbitration route and stay out of the courts.

From the standpoint of most Massachusetts business litigation lawyers however, the big tradeoff is the lack of review of arbitration decisions. While parties almost always have an avenue of review in court via the appeals process, review in arbitration is limited to cases where the arbitrator exceeded the scope of his authority or there is fraud or some other procedural irregularity. Errors of law on the part of the arbitrator however, no matter how egregious, do not create appellate rights for the aggrieved party.

This standard is not new however, and has long been the acknowledged tradeoff for the benefits of arbitration.

In 2005, in a case entitled Massachusetts Highway Department v. Perini Corporation, 444 Mass. 366 (2005), the Massachusetts Supreme Judicial Court expanded the rights of arbitrators to rule on gateway procedural issues in the case. For instance, if a party challenges whether a case was brought timely so that it could be adjudicated, it is up to the arbitrator and not the courts to make that determination, and, if the arbitrator does get it wrong, it is nonetheless a binding decision to which the parties will be bound.

The right to make these so-called gateway rulings was a significant departure and again causes us to reconsider the advisability of arbitration provisions in business contracts.

In our opinion, arbitration can still be a useful (and cost effective) tool, and should be agreed upon and incorporated into business agreements in most situations. The key to successful arbitration hinges on the selection of the arbitrator. Because the arbitrator now rules on both the so-called “gateway issues” and the procedural issues during the arbitration, as well as the ultimate issues in the case, it is crucial that parties hire an experienced arbitrator with a solid foundation in law. I would recommend that in most situations the parties choose a skilled lawyer with a broad based business litigation background. The lawyer-arbitrator need not have experience in the exact issue to be arbitrated. Most experienced business litigation lawyers will be able to listen to the evidence and making reasonable findings or awards based upon the facts of the case. It is much more important that the lawyer-arbitrator have a solid understanding of procedural law as there are no “do-overs”. If you are looking for experienced lawyer-arbitrators to handle a business arbitration in Massachusetts get in touch with Parker | Scheer. Email Barry Scheer at BSS@Parkerscheer.com.

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Contact Parker|Scheer Business Lawyers

For more information on mediation and arbitration, or if you are seeking a Boston business lawyer for any other needs, please contact Barry Scheer. If you prefer, you can also telephone our offices in Boston seven days a week at toll free 866-414-0400.

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