In Pennsylvania, parties to a dispute are free to resolve their matter outside of the courts by agreeing to alternative dispute resolution, such as AAA arbitration. This is not scheduled through the courts. In fact, with AAA arbitration, no court is involved. The AAA arbitration fees are paid by the parties (not the county, state, or federal courts). A party may file suit in court instead, but if the parties have a prior agreement to litigation in AAA arbitration, the court may compel arbitration and suspend the court action pending the outcome of AAA arbitration.
In federal court, the parties parties are required to consider alternative dispute resolution early in the case, through mediation, for example, but AAA arbitration is different from mediation, which is non-binding, as AAA arbitration is binding and fully resolves the entire case.
Rules of Law and Procedure
In the AAA arbitration forum, you do not follow the state or federal court rules of civil procedure (how and when things are filed), however, the state and federal rules governing basic contract law will apply.
Advantages
One clear advantage of arbitration over the courts is, the arbitrators can be selected based on their expertise in the subject matter of your dispute, which could shorten the amount of time that lawyers spend educating the fact finder.
Drawbacks
Parties often complain of the cost of filing a claim in arbitration. Plus, unlike the rules of federal or state procedure (where there are cases interpreting the rules), the AAA arbitration rules have not been tested and re-tested by the courts and so experienced counsel is needed to avoid disputes over side issues in the absence of cases interpreting the rules.
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