Arbitration is a form of dispute resolution where a neutral decision-maker, called an arbitrator, hears both sides of a disagreement and issues a binding decision. It’s designed to be faster, more affordable, and less formal than going to court.
Many people don’t learn about arbitration until they face a dispute. Part of the mission of the American Arbitration Association®, a 501(c)(3) not-for-profit organization, is to educate the public about alternative dispute resolution, including arbitration. This blog addresses common questions about arbitration and the American Arbitration Association.
Q: What does the American Arbitration Association do?
The American Arbitration Association helps disputing parties navigate conflict in an accessible, fair, and efficient process. The American Arbitration Association administers various kinds of arbitration cases, including those involving disputes between consumers and businesses. When parties have a dispute, they can mutually agree to file their case for consumer arbitration with the American Arbitration Association. As a neutral and impartial administrator, the American Arbitration Association manages the case from beginning to end, handling appointment of the arbitrator, facilitating document exchange, maintaining the case schedule, and providing many other services to both parties to foster a smooth resolution process.
The American Arbitration Association publishes rules for its arbitration and other dispute resolution processes, such as mediation, all of which are available for free on its website, www.adr.org. The American Arbitration Association has rules specific to disputes between consumers and businesses, the Consumer Arbitration Rules and Mediation Procedures. These rules were drafted with the principles of the Consumer Due Process Protocol in mind, which aim to keep arbitration fair for consumers. The American Arbitration Association helped create this Protocol and is the leader in administering consumer arbitrations fairly and efficiently.
Q: How does the American Arbitration Association keep things fair?
The American Arbitration Association has safeguards that keep the consumer arbitration process fair for all parties:
- Consumer Due Process Protocol: The Protocol was a joint creation of the American Arbitration Association and advocates for both consumers and businesses, focusing on providing a fair process for consumer arbitration. This framework fosters parties’ rights like reasonable costs, impartial arbitrators, adequate discovery, and a fundamentally fair hearing.
- Consumer Arbitration Rules: The American Arbitration Association specifically developed these rules to implement the protections of the Consumer Due Process Protocol in the arbitration process.
- Consumer Clause Registry: All businesses that name the American Arbitration Association in any contract or agreement with their customers must register their clause with the American Arbitration Association, either in advance of any arbitrations or when an arbitration is filed pursuant to a clause not yet registered. The American Arbitration Association reviews all clauses submitted for registration to make sure they comply with the Consumer Due Process Protocol and posts all compliant clauses on its publicly available Consumer Clause Registry, which can be found at www.adr.org.
These protections aim to make the consumer arbitration dispute resolution experience transparent, fair, and accessible. The American Arbitration Association promotes transparency and fairness by publishing online data about its consumer and other caseloads.
Q: What rights do individual consumers have in consumer arbitration?
Under the Consumer Due Process Protocol and the American Arbitration Association’s Consumer Arbitration Rules, consumers are entitled to the same relief that is available in court. In fact, research from the U.S. Chamber of Commerce Institute for Legal Reform (2022) shows that arbitration can be beneficial for consumers:
- Consumers are more likely to win in arbitration (42%) than in court (29%);
- They win higher average awards in arbitration ($80,000) compared to court ($71,000); and
- Arbitration is typically faster (an average of 321 days vs. 439 days in court).
Q: Are arbitration decisions binding?
Generally, arbitration decisions are final, binding and not subject to court review except in very limited circumstances, such as where the award was obtained by fraud. Some consumer arbitration clauses also allow a party to appeal an arbitrator’s award to a different arbitrator or panel of arbitrators.
Q: How does the arbitrator decide the case?
Each party will submit to the arbitrator, and each other, information relevant to the case, including documents, witness lists, and other evidence. Parties may present their evidence and arguments before the arbitrator at a live hearing (either in-person or virtual). For cases seeking less than $25,000, the arbitrator can hold a “desk” arbitration, where the arbitrator decides the case based on the parties’ written arguments and submissions. Even in those cases, parties can request a live hearing, and arbitrators can grant one. The arbitrator carefully considers each party’s argument before making their ruling, called an “Award.”
Q: How does the American Arbitration Association make the process transparent?
The American Arbitration Association, pursuant to state statutes, publishes on its website certain data and information about its consumer cases and updates that report quarterly. The American Arbitration Association and arbitrators are required, pursuant to the Consumer Arbitration Rules and, for arbitrators, The Code of Ethics for Arbitrators in Commercial Disputes, to keep case information confidential, except where disclosure is required by law. Parties generally have a right to disclose details of the proceeding unless they have a confidentiality agreement in place.
Additionally, the American Arbitration Association provides annual infographics illustrating the prior year’s award outcomes, time to award, and information on whether the case was settled, dismissed, withdrawn, or decided, as well as other data.
Q: How does the American Arbitration Association make the process affordable?
The Consumer Due Process Protocol requires that a consumer’s costs in arbitration be reasonable. The fee schedule applicable to the American Arbitration Association’s Consumer Arbitration Rules caps the consumer’s filing fee to $225 (as of 2025), and consumers who cannot afford the fee may qualify for a fee waiver. Consumers are not required to pay the arbitrator’s compensation, which the business pays, unless the consumer elects to pay up to half of the compensation. In 2024, consumers paid no filing fees on more than half of the American Arbitration Association’s 8,400+ consumer cases.
Q: Where do the American Arbitration Association’s administrative fees go?
The American Arbitration Association uses the administrative filing fees parties pay to support its case administration system, processes, and services. Arbitrator compensation is paid 100% to the arbitrator. Additionally, the American Arbitration Association supports public-service initiatives such as the AAA-ICDR Foundation®, which funds initiatives that improve conflict resolution and prevention across the U.S. and globally. These include:
- Community mediation services
- Court-annexed and school-based programs
- Disaster relief conflict resolution
- Support services for victims of harm
- Police-community dialogue initiatives
Q: How does the American Arbitration Association support access to justice?
Access to justice is the principle that everyone has the right to fair, effective dispute resolution, regardless of their circumstances, income, or background. Consumer arbitration and mediation often provide quicker, more affordable, and less intimidating paths to conflict resolution than court, thereby supporting access to justice efforts. As a not-for-profit, the American Arbitration Association focuses on reducing barriers that impede access to its dispute resolution processes, transforming how legal issues are resolved for the better. Guided by this mission-driven model, the American Arbitration Association advances dispute resolution through educational programs, innovative procedures, and resources that empower individuals, businesses, and communities to resolve conflicts efficiently and equitably.
Resources
Consumers and businesses should educate themselves about the arbitration process before a consumer dispute arises. The American Arbitration Association is proud to provide information about the process through its website, www.adr.org, through various publications and presentations, and offers an array of resources for self-represented parties. The American Arbitration Association keeps the consumer arbitration process accessible, fair, and efficient for consumers and businesses, so they can resolve their disputes and move on with their lives.