Court-annexed Arbitration Comes to Colorado

Publication year1987
Pages1941
CitationVol. 16 No. 10 Pg. 1941
16 Colo.Law. 1941
Colorado Lawyer
1987.

1987, November, Pg. 1941. Court-Annexed Arbitration Comes to Colorado




1941


Vol. 16, No. 10, Pg. 1941

Court-Annexed Arbitration Comes to Colorado

by Neil O. Littlefield

[Please see hardcopy for image]

Neil O. Littlefield is Professor of Law at the University of Denver College of Law.

The recent enactment of the Mandatory Arbitration Act ("Act")(fn1) providing court-annexed arbitration for Colorado offers the opportunity generally to discuss arbitration as a possible cure for court congestion and to take a specific look at what the Colorado General Assembly has provided.

BACKGROUND

Recently, two related themes have recurred in discussions on the state of the law. One theme revolves around the so-called "litigation explosion"; the other bemoans congestion in the courts. The resulting delays and increases in costs of litigation have been a favorite topic of commentators. It is beyond the scope of this article to attempt to evaluate to what extent either or both of these themes have been exaggerated. However, in any event, reaction to such commentaries has engendered increased interest in alternatives to litigation as a means of resolving disputes. An assumption is made that traditional litigation in a court with its attendant costs and delays can be replaced, in certain circumstances, with alternative dispute resolution ("ADR") mechanisms. A further assumption is that mechanisms without the complete formalities of typical litigation will cost less and save time. Two alternative dispute resolution mechanisms often proposed are mediation and arbitration.


Mediation

Mediation consists of utilizing an independent third party to assist disputants in settling a conflict short of trial. The third party, the mediator, has no power to compel agreement, but is invited to expedite settlement by agreement of the parties. The success of this process generally depends upon the skill and training of the mediator and the willingness of the parties to negotiate.

The process can be expected to have more success where the contending parties have a continuing relationship with one another. The mediator may be able to suggest a mutually acceptable agreement if each party is made to realize the need to give and take in the relationship. The resulting agreement, made by the parties and only suggested by the mediator, is an acceptable compromise of each of the party's desires. The process has had some success in neighborhood disputes, family and divorce situations, and landlord/tenant relations.

The Colorado Bar Association has recently provided information to the public on mediation services.(fn2) Also, the Colorado Dispute Resolution Act, enacted in 1983, provided for court-sponsored mediation services.(fn3) There is little indication that the procedure is generally utilized, perhaps because courts have been unable to locate funding for such a program. For mediation to be successful, it is necessary to train mediators whom both parties and their attorneys can trust.


Arbitration

Arbitration as an informal process of dispute resolution has a long and respected history. Arbitration is a procedure whereby parties with a potential or present dispute agree that their dispute shall be presented to and resolved by an impartial party who is given the power to render a decision that is not only binding on both parties, but is subject to appeal in only very limited circumstances. Certain entities have preferred the arbitration process over court action. For example, many commercial and construction contracts include standard terms which provide that any dispute arising therefrom is to be submitted to arbitration. In most states, such an agreement prevents either party from suing the other in court. The Uniform Arbitration Act, which has been adopted in Colorado, and the Federal Arbitration Act have facilitated the use of arbitration by agreement of the parties.(fn4)


A listing of the perceived advantages of arbitration would include the following. First, arbitration is usually perceived to be a less expensive alternative to going to court. The parties absorb the cost of the arbitrator (although some arbitration is done by volunteers), but the savings in costs of lawyers' fees and in the time the parties would have to spend to attend and




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testify in court should more than compensate

Second, it is generally accepted that there is a real reduction in the time consumed between the initiation of the action and the decision when arbitration is used. This saving in time has become more significant as the heavy caseload of many courts has resulted in extemely long waits for a spot on the crowded court calendar.

Third, many entities prefer arbitration in that the process permits experts to serve as one or more of the arbitrators. Contractual arbitration generally assumes a panel of three arbitrators. One reason that commercial contracts have dictated arbitration as the alternative to trial is that many parties had been dissatisfied with court-decided cases, believing the courts cannot have a proper appreciation of the special facts of the commercial transaction and business involved.

Finally, the high likelihood that the arbitration hearing will be confidential is a significant advantage for many potential litigants. Confidentiality can be important where competitors of one or both parties may be able to observe a trial and learn how the litigants do business. Parties may even be handicapped in a public trial if they fear disclosure of their business practices and, as a result, limit complete disclosure of matters relevant to a fair decision. Some firms, of course, dislike any publicity about their legal disputes.

Probably the major articulated disadvantage of arbitration is the fact that the normal procedural and evidentiary rules of a court trial can be expected to be considerably relaxed in an arbitration hearing. Many legally trained minds believe such procedures and rules are necessary to assure a fair hearing. This same feature of arbitration, on the other hand, is also seen as a distinct advantage to many parties to arbitration, as well as to some lawyers. The relaxation of certain procedural...

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