Arbitration is an alternative dispute resolution program that is offered as a service to REALTOR® members which provides a forum for resolving business disputes in lieu of litigation. Arbitrations are completely separate from ethics hearings.
Arbitrations are held when both agents acted legally and ethically, but a legitimate dispute still arose between the agents. It usually involves compensation disputes between brokers in two different firms. Arbitration is not about sanctioning agents for bad behavior - it exists to resolve business disputes involving REALTORS® in the event that the REALTORS® have been unable or unwilling to resolve the dispute themselves.
Mandatory vs. Voluntary
REALTORS® are not obligated to use their Local Board/Association’s arbitration services to resolve disputes. REALTORS® may resolve disputes themselves or submit the dispute to other venues including courts. However, if one party who is eligible to use the association's Arbitration services submits the claim to their local board, then the other party may be obligated to participate in arbitration and abide by the arbitrators' decision if the case is classified as mandatory.
Mandatory vs. Voluntary Arbitration (NAR)
In arbitrable cases, the local board/association convenes a panel of impartial, unbiased, and experienced REALTORS® to consider your case. Designed to ensure that the due process rights of all parties are protected, complainants and respondents may be represented by attorneys, call witnesses, and present evidence.
The parties also enjoy a limited right to request a procedural review to the decision if they believe that there were procedural deficiencies or other irregularities that constitutes a deprivation of due process. However, this is not an appeal on the decision itself, only the procedures used in conducting the hearing.
In addition to Arbitration services, every local board/association also offers Mediation as an alternative for resolving commission or other business disputes. Mediation has become a popular alternative to Arbitration because it is quicker, easier, and provides the parties with more control over the final resolution of the dispute.