Court-Annexed Arbitration

Court-annexed arbitration is mandatory arbitration that parties in some jurisdictions are required by law to try for particular kinds of civil cases before they may bring those cases to trial. Unlike traditional arbitration, which is voluntary but binding, court-annexed arbitration is mandatory but not binding. If either of the parties does not like the arbitration award, that party is free to appeal the award through a trial in court (called a trial de novo, in legal terminology). Many jurisdictions, however, try to limit such appeals by charging a hefty fee to parties that do not improve their arbitration award at the trial. (The assumption is that if they come out the same or worse, the appeal was frivolous.)

Developed initially in Pennsylvania in 1952, court-annexed arbitration has become increasingly popular as a way to mitigate judicial backlogs. Typical cases that are required to use court-annexed arbitration are civil cases seeking monetary remedies below a certain threshold, which ranges from about $15,000 to $150,000. Some jurisdictions specify the type of cases as well: automobile injury cases, for example. Often exemptions are possible for inappropriate cases, and litigants who do not fall under the mandatory categories can choose to use the procedure on a voluntary basis as well.
The decision-making processes used in court-annexed arbitration are similar to those in traditional arbitration. The parties choose their own arbitrator from lists supplied by the court or by private organizations, such as the American Arbitration Association. The arbitrator reviews written documents, holds a hearing, and renders a decision, which he or she delivers to the parties and files with the court. If neither party requests a trial de novo within a predetermined period (30 days, for example), the decision is deemed final and is enforceable just as if it were obtained in a regular trial.

According to Nolan-Haley (1992), participants generally perceive court-annexed arbitration to be fair, but it is not clear whether it significantly reduces judicial time and costs. Nevertheless, increasing numbers of local, state, and federal courts are adopting such procedures. By 1985, 24 states and 19 federal districts used court-annexed arbitration or were actively considering it. This number has continued to grow, and in 1990, 33 states had court-annexed arbitration or mediation programs; by 1994, the number of such programs was in the hundreds (Dauer 1994, 13-2).