A Potentially Less Expensive and More Effective Arbitration Process

Have you ever handled a case that was difficult to settle because of a single disputed fact? Party A insists something is black, while Party B argues just as adamantly that it is white. These types of factual disputes often become significant roadblocks to resolution, prolonging the process and increasing costs for all involved.

During my time as a trial judge, I encountered many such cases on my court trial docket. When a pivotal factual issue stood in the way of settlement, I frequently scheduled a quick, focused evidentiary hearing. After considering the evidence, I would make a factual determination: The issue was black, white or sometimes gray. These limited hearings did not waste court time or add expense for the parties, as the testimony was not duplicated at trial if the case did not settle.

Often, upon receiving my factual findings, the parties engaged in productive settlement discussions and resolved their case. These focused hearings benefited both the courts and litigants—requiring only a fraction of the time and cost of a full trial while often leading to settlement.

Applying Limited Evidentiary Hearings in Arbitration

I see no reason why this same approach could not be applied in arbitration. If parties face a major factual disagreement that stands in the way of resolution, a limited evidentiary hearing could be scheduled to address that specific issue. The arbitrator would then make a factual determination, after which the parties could engage in settlement discussions. If settlement is unsuccessful, the arbitration would proceed as planned, with the benefit of having already resolved a key factual dispute.

A Model Under Minnesota’s Rule 114

In Minnesota, where I served as a trial judge, Rule 114 of the Minnesota General Rules of Practice offers flexibility in ADR by including an "Other" category, which allows parties to create customized ADR processes through a written agreement. Specifically, the rule states:

Parties may create other ADR processes by means of a written agreement that defines the role of the Neutral.

This provision enables Minnesota litigants to agree in writing to a focused, limited evidentiary hearing on a specific disputed fact. The agreement could require the arbitrator to make factual findings on the issue, followed by mandatory settlement negotiations—facilitated by either the arbitrator or a separate neutral. If settlement is not reached, the arbitration would resume, incorporating the established factual findings.

Expanding the Concept Beyond Minnesota

Alternative dispute resolution is increasingly favored by courts and litigants across the country, making it likely that this approach could be implemented in arbitrations beyond Minnesota. Even in jurisdictions that lack a formal rule like Rule 114, parties can incorporate this process into their arbitration agreements. By agreeing in advance to a focused evidentiary hearing on key factual disputes, followed by structured settlement discussions, parties can streamline the arbitration process, reduce costs and increase the likelihood of resolution.

A focused evidentiary hearing offers an efficient way to resolve critical factual disputes that stand in the way of settlement. By incorporating this approach into arbitration agreements, parties can save time and money while improving the overall effectiveness of the ADR process. Given the flexibility and adaptability of arbitration, there is no reason why this practice couldn’t be more widely adopted to facilitate faster and more cost-effective dispute resolution.

Disclaimer: The content is intended for general informational purposes only and should not be construed as legal advice. If you require legal or professional advice, please contact an attorney.