Judicial vs. Contract Arbitration

• In California, parties may reach arbitration proceedings in one of two ways: judicial arbitration and contract arbitration. Under the California Civil Code, the court may order judicial arbitration in certain civil cases. In this case, the purpose is to reach a resolution, which results in the reduction of the number of cases that go through the court system. Contract arbitration applies in situations wherein the parties have agreed in a contract to resolve disputes in arbitration.
  
  

Default

• Arbitration clauses in contracts often require the parties to arbitrate when disagreements arise; therefore, a default by one party often means that the parties must resolve the issue in arbitration. A default occurs when one party refuses or fails to perform as required by the contract. Arbitration involving a default is contract arbitration, which means that certain requirements and procedures will apply.
  
  

Binding

• Unlike judicial arbitration, wherein the arbitrator's decision is not binding on the parties, contract arbitration will result in a binding decision. A binding decision requires that the parties abide by the arbitrator's judgment. In most cases, not even the court can overturn an arbitrator's decision.
  
  

Arbitrator

• The arbitrator has a similar role as that of a judge. The arbitrator will hear evidence presented by the parties and make a decision. The court can appoint the arbitrator if requested by the parties, or the contract can pre-assign the arbitrator. Unlike a judge, an arbitrator does not have to be an attorney if the court does not appoint the arbitrator. In some cases, the parties instead select an arbitrator because of his expertise in a particular area.
  
  

Proceedings

• In California, arbitration rules differ from the rules that apply in court. When arbitration is based on the contract, the right to conduct discovery does not apply unless the contract provides this right. In addition, in contract arbitration, the arbitrator does not have to base her ruling on the law (unless provided in the contract) and the rules of evidence and procedure that apply in court are inapplicable.