Arbitrator
A neutral third party selected by the parties to hear their dispute and issue a binding decision in arbitration.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a Arbitrator?
An arbitrator is a neutral third party chosen to resolve a dispute through arbitration. The arbitrator hears evidence, applies the law, and issues a binding decision (award). The arbitrator acts as both judge and jury.
Unlike a judge, an arbitrator has only the power that the parties give them in the arbitration clause. Arbitrators are typically retired judges, practicing attorneys, or experts in the subject matter (engineering, finance, etc.).
Arbitrators are supposed to be neutral and impartial. However, confidentiality in arbitration prevents public exposure of arbitrators who show bias or error.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Neutrality
An arbitrator must be neutral and impartial. Conflict of interest must be disclosed. An arbitrator with undisclosed conflicts can result in award being vacated.Expertise
Parties can require arbitrators to have specific expertise (engineer for construction disputes, accountant for business valuation). Expertise increases cost but can improve decision quality.Authority
An arbitrator's authority is limited to what the arbitration clause grants. If the clause limits the arbitrator's power, the arbitrator cannot exceed it.Compensation
Arbitrators are paid for their time, typically $5,000-$10,000+ per day depending on experience. Parties usually split arbitrator fees.Real-World Example
You have a dispute with a software vendor over whether the software meets specifications. You and the vendor select a retired software engineer as arbitrator through the AAA. The arbitrator tests the software, hears arguments, and issues a binding award.
The arbitrator's technical expertise helps evaluate the software's compliance. The arbitrator's award is binding - you cannot appeal it to a court just because you disagree.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Arbitrator Selection ClauseWatch Out For
Conflict of interest
Before an arbitrator is appointed, investigate potential conflicts (prior representation, financial interests, professional relationships). An award from a biased arbitrator can be vacated.Lack of appeal rights
An arbitrator's mistakes in applying law or interpreting facts are not appealable. Arbitrators have broad discretion, and awards are nearly final.Arbitrator replacement
If the arbitrator becomes unavailable or unsuitable, replacement procedures vary. Make sure the arbitration clause addresses arbitrator vacancies.Limited reasoning
Arbitrators often issue awards with minimal reasoning. You may not understand why the arbitrator ruled against you, making appeal challenges difficult.Don't let arbitrator deadlines catch you off guard
Key dates tied to arbitrators - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Select arbitrators with care
If you can choose the arbitrator, select one with relevant expertise and a reputation for fairness. Poor arbitrator selection can result in a bad award.Conduct background checks
Before an arbitrator is appointed, research their background, prior awards, and reputation. Arbitration organizations maintain arbitrator databases.Require detailed reasoning
In your arbitration agreement, require the arbitrator to provide written reasons for the award. This helps with any potential challenge and clarifies the arbitrator's thinking.Set fee allocation
Specify upfront how arbitrator fees are paid: equally split, loser pays, or proportionally based on claims? This affects the cost of arbitration.Related Terms
Frequently Asked Questions
Can I choose the arbitrator?
Usually yes. The arbitration clause typically specifies the selection process. Some clauses allow parties to jointly select the arbitrator. Others use the arbitration organization's list, or allow each party to nominate one arbitrator, who then select a third.
What if the arbitrator has a conflict of interest?
Conflicts must be disclosed. If an arbitrator fails to disclose a conflict, the award may be vacated. Before appointing an arbitrator, always inquire about potential conflicts.
Can an arbitrator be removed for bias?
Yes, an arbitrator can be challenged for bias if there is evidence of prejudice or conflict. However, the standards are high. An arbitrator's unfavorable ruling alone does not show bias.