Chapter 2 - § 2.1 • INTRODUCTION

• Jurisdiction: Colorado

§ 2.1 • INTRODUCTION

Arbitration and mediation are the most commonly used means of alternative dispute resolution (ADR). Because mediation requires that the parties agree upon a resolution in order to resolve a dispute, there are relatively few legal requirements governing the mediation process. Arbitration, on the other hand, requires that the parties agree only upon the process to be followed to result in a resolution — not on the resolution itself. As a result, arbitration is evolving into a process much more akin to litigation, with increasing rules and structure, while still maintaining its distinct characteristics and flexibility as compared to litigation. The following chapters provide an overview of those rules and structures as embodied in Colorado statutes and case law, federal statutes, and Colorado federal court case law.

§ 2.1.1—What Is Arbitration?

The U.S. Supreme Court has clearly defined that arbitration under the Federal Arbitration Act (FAA) is a matter of contract, and must be vigorously enforced.¹ Arbitration is defined in the Colorado Dispute Resolution Act as "the referral of a dispute to one or more neutral third parties for a decision based on evidence and testimony provided by the disputants."² As will hereinafter be seen, that definition is narrower than the scope of arbitration subject to the arbitration statutes. Generally, arbitration does not require that all of the arbitrators be neutral. There is no reference to binding or conclusive results being rendered.

Arbitration can be binding or non-binding. Generally, a reference to arbitration is to binding arbitration, meaning the arbitrator's award is final and conclusive upon the parties, except for the limited judicial review provided by the state and federal arbitration statutes. This book deals primarily with binding arbitration.

In certain cases, however, the parties agree to non-binding arbitration. Then, the courts and the arbitrator are bound by the parties' agreement that their arbitration is advisory only.³ Very generally speaking, all procedures for non-binding arbitration should be the same as for binding arbitration. Only the effect of the award would differ. The role of the court in non-binding arbitration has not yet been tested. See § 2.3.1, as to whether a non-binding process is within the arbitration statute.

However, while there are cases to the contrary, most cases hold that the FAA applies to non-binding arbitration agreements, and specifically § 3 (stay of...