Arbitration is a method of resolving disputes outside the courtroom. Instead of a judge or jury, a private decision maker called an arbitrator, or a panel of arbitrators, hears the case and issues a decision known as an award. Arbitration is widely used in commercial, employment, construction, and consumer matters. This guide explains how arbitration works under Georgia law, the statute that governs it, how arbitration agreements and awards are treated, and how arbitration differs from a court trial.
What Arbitration Is
Arbitration is a form of binding dispute resolution. The parties agree, either before a dispute arises or after, to submit their disagreement to an arbitrator rather than to a court. The arbitrator listens to evidence and argument and then renders an award. In binding arbitration, that award resolves the dispute, and it can be enforced through the courts in much the same way as a court judgment.
Arbitration differs from mediation. A mediator helps parties negotiate a settlement but does not impose a decision. An arbitrator, by contrast, decides the matter. The parties are bound by the arbitrator’s award rather than by any agreement they reach themselves.
The Georgia Arbitration Code
Arbitration conducted under Georgia law is governed by the Georgia Arbitration Code, found at O.C.G.A. Section 9-9-1 and following. The Code establishes how arbitration agreements are enforced, how arbitrators are appointed, how proceedings are conducted, and how awards are confirmed, modified, or challenged in court.
Georgia courts have observed that the Arbitration Code is in derogation of the common law, meaning it changes the older legal default, and that it is strictly construed and applied according to its plain terms. A separate federal statute, the Federal Arbitration Act, governs arbitration agreements that affect interstate commerce, and its rules can apply alongside or instead of the Georgia Code depending on the transaction. Georgia also has a distinct part of its Code addressing international commercial arbitration.
Arbitration Agreements
Arbitration begins with an agreement to arbitrate. That agreement is most often a clause within a larger contract, such as an employment agreement, a construction contract, or a consumer service agreement. It can also be a separate agreement made after a dispute has arisen.
Under the Georgia Arbitration Code, a written agreement to submit a dispute to arbitration is generally valid and enforceable. When a valid arbitration agreement covers a dispute, a court will ordinarily require the parties to arbitrate rather than litigate, and it may stay or dismiss a court case so that arbitration can proceed. Like other contracts, an arbitration agreement can be challenged on ordinary contract grounds such as fraud or unconscionability, and a court decides whether a valid and applicable agreement exists.
How an Arbitration Proceeds
The conduct of an arbitration is shaped by the parties’ agreement and by the rules of any arbitration organization the parties have chosen. In general, an arbitration involves the exchange of information between the parties, a hearing at which evidence and testimony are presented, and a decision by the arbitrator.
Arbitration is typically less formal than a court trial. The strict rules of evidence may be relaxed, the process is often faster, and the proceedings are generally private rather than open to the public. The arbitrator’s authority comes from the parties’ agreement, so the scope of what the arbitrator may decide is defined by what the parties agreed to submit.
Arbitration Awards and Court Confirmation
The arbitrator’s decision is the award. Under the Georgia Arbitration Code, an award can be turned into an enforceable court judgment through a process called confirmation. A party may apply to a court to confirm the award, and the application generally must be made within one year after the award is delivered. Upon confirmation, the court enters a judgment that is enforced like any other court judgment.
Challenging an Award
The grounds for setting aside an arbitration award are narrow. O.C.G.A. Section 9-9-13 lists the reasons a court may vacate an award. An award may be vacated when the rights of a party were prejudiced by corruption, fraud, or misconduct in procuring the award; by the partiality of an arbitrator appointed as a neutral; by the arbitrators overstepping their authority or so imperfectly executing it that a final and definite award was not made; by a failure to follow the procedures of the Code, unless the objecting party continued without objection; or by the arbitrator’s manifest disregard of the law.
The manifest disregard standard is demanding. Georgia courts have construed it narrowly, requiring clear evidence that the arbitrator was aware of the correct law and intentionally chose to ignore it. A simple disagreement with the arbitrator’s reasoning or result is not enough. A court generally will not re-examine the merits of the dispute, and an award is not vacated merely because a court might have decided the case differently.
O.C.G.A. Section 9-9-14 separately allows a court to modify or correct an award in limited situations, such as an evident miscalculation of figures or an obvious mistake in describing a person or property.
Arbitration Compared With a Court Trial
Arbitration and litigation each carry trade-offs. Arbitration is often faster and more private, the procedures can be more flexible, and the parties may have a role in selecting the arbitrator. At the same time, the limited grounds for review mean that an arbitration award is difficult to overturn even if a party believes the arbitrator made an error. A court trial offers broader rights of appeal and the procedural protections of the court system, but it is generally a public proceeding and can take longer.
Summary
Arbitration is a binding method of resolving disputes outside of court, governed in Georgia by the Georgia Arbitration Code at O.C.G.A. Section 9-9-1 and following. It begins with an agreement to arbitrate, proceeds through a private hearing before an arbitrator, and ends in an award that a court can confirm into an enforceable judgment, generally on application within one year. The grounds to vacate an award under O.C.G.A. Section 9-9-13 are narrow, and the manifest disregard standard in particular is interpreted strictly. Arbitration offers speed and privacy in exchange for limited rights of review.
Disclaimer
This article is provided strictly for general educational and informational purposes. It is intended to explain how Georgia law works as a matter of public legal education, and it does not constitute legal advice, a legal opinion, or a recommendation about any particular course of action. Reading this article, or contacting the website on which it appears, does not create an attorney-client relationship between the reader and any law firm, attorney, or author.
The law changes over time. Statutes, regulations, court rules, and judicial decisions discussed here may have been amended, repealed, superseded, or reinterpreted after the date of publication, and citations to specific code sections or cases reflect the law only as it was understood when this article was written. The application of any legal principle also depends heavily on the specific facts and circumstances of an individual matter, and outcomes vary from case to case.
For these reasons, no one should rely on this article as a substitute for advice from a licensed Georgia attorney who can review the particular facts involved. The author and publisher make no warranty, express or implied, regarding the accuracy, completeness, timeliness, or applicability of the information provided, and disclaim any liability for any action taken or not taken based on this content.