Chapter 2 - § 2.3 • THE VARIOUS TYPES AND MEANINGS OF "ARBITRATION"

• Jurisdiction: Colorado

§ 2.3 • THE VARIOUS TYPES AND MEANINGS OF "ARBITRATION"

Fortunately, the term "arbitration" does not have a fixed meaning, and parties have somewhat broad latitude to define the process themselves in their own agreements. However, there probably are a few characteristics that must exist for the term to apply. These may include: (1) a decision/resolution of the dispute must be rendered, whether binding or non-binding; (2) the parties present their respective evidence (adversary system), as distinguished from an adjudicative system whereby the "arbitrator" might seek out the evidence; and (3) perhaps at least one arbitrator must serve as neutral decision-maker. Of course, as discussed elsewhere, there are other characteristics that must be present in order for the process to be within the scope of the arbitration statutes. See § 2.1.1.

See generally §§ 2.1-2.2, 3.4.1, 3.7.2, 4.3.5.

§ 2.3.1—Binding Versus Non-binding Arbitration

While this author knows of no Colorado case dealing with non-binding arbitration (except as a condition precedent to litigation), there is no reason why the arbitration statutes and common law are not applicable, at least through the hearing, short of confirmation and appeal. Non-binding arbitration, while not bringing finality, does have other benefits, chief of which is that it enables the parties to see how a neutral would decide the claims, providing a strong foundation for negotiation of a settlement. However in Lim v. American Economy Insurance Co.,¹⁶ the Colorado federal district court appeared to hold that the process result had to be binding on the parties. However, since a non-binding process was in issue, it could be viewed as dictum on the issue. See also § 2.1.1.

Non-binding arbitration is discussed in Chapter 25, "Other ADR Procedures," and § 2.1.1.

§ 2.3.2—Administered Versus Non-administered Arbitration

In a non-administered arbitration, the arbitrator provides all administration of the arbitration. In other words, it is like a judicial procedure in which the judge does not have a clerk of court to handle the administrative matters; he or she handles them himself or herself.

An administered arbitration, on the other hand, adds a "clerk of arbitration" to handle administrative matters that are analogous to matters handled by a clerk of court. This administration provides a separation between the arbitrator and the parties that often is very helpful. For example, with administration, the arbitrator usually is not in...