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Class Arbitration Analogous to Class Action

Tuesday, July, 5, 2011

Class arbitration is a term that is becoming more widespread, but many people still do not understand exactly what the phrase means.  Simply put, class arbitration is an arbitration proceeding in which a few individuals represent an entire group of others who are similar in several respects, most importantly in the nature of their claims against the defendant.


Proceeding by class is very common in several kinds of arbitration, most notably when it comes to securities arbitration.  In effect, it is like a class-action lawsuit, except that instead of being litigated in a court of law, the dispute in question is decided by one or more arbitration attorneys.  The panel or individual responsible for settling the case hears testimony from both sides, conducts any needed investigation into the facts, and then issues a decision that usually forms a final end to the case.


Arbitration Rarely Involves Appeals


Like individual arbitration, the award issued by the arbitration attorney is almost always final.  In most cases, there is no opportunity for appeal, meaning that both sides can regard the decision as marking an end to the case.  This allows for better planning since once an award is issued, the parties do not have to worry that it will be in legal limbo for decades longer as appeals proceed through the court system.