Arbitration is an out-of-court process for settling a dispute that allows consumer and dealer reach a resolution through an appointed, unbiased arbitrator. Intended to offer prompt resolution of the disputed matter, arbitration is typically faster and less expensive than ordinary court proceedings. Arbitration is most often governed by an agreement entered into by both parties, which mandates that if a dispute arises the parties must forego the court system. Automobile dealers can include a binding mandatory arbitration clause within their contracts for vehicle purchases or leases. If an individual consumer chooses to reject a dealer's arbitration provision, that dealer may choose to use a different method of agreement or to refuse to sell or lease the vehicle to that consumer. Of course, the consumer always has the option to lease or purchase a vehicle through a dealer that does not require an arbitration agreement.
Similar to a judge in court, an arbitrator reads briefs and documentary evidence, hears testimony, examines evidence and renders an opinion on liability and damages after the hearing. The award is then confirmed by a court of appropriate jurisdiction and entered as a judgment. The majority of auto dealer arbitration provisions prefer the arbitrator's decision then to be subjected to a second arbitrator's appellate review of the record. Once the arbitration, and any appellate arbitration review, is complete the decision is final and binding.
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