A Big Guide to Small Claims Court - Part V: To Arbitrate or Not to Arbitrate

This is the fifth in a multi-part series that explores and explains filing and winning a small claims court case.  You can access the other parts by clicking here or just scrolling down.

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In prior parts, we discussed deciding to sue, suing, and then trying to resolve the case by agreement, something we don’t necessarily recommend even if the person you’re suing wants to settle. 

Now it’s time to see the judge. 

Not all “judges” are actually judges.  Due to the volume of cases, an actual judge can’t address all the cases in small claims court. If they did, what feels like an endless process would actually be an endless process.  Most courts rely on volunteer lawyers they call “arbitrators.”  Technically, arbitration is an "alternative dispute resolution process" where both parties agree to an expedited process to resolve their dispute using an agreeable neutral who comes to a binding decision.  Unlike mediation, which is the process by which a stipulation can be reached (addressed in a prior part), the decision an arbitrator reaches is binding, as if a judge rendered it.  A mediator’s job is to reach consensus that leaves everyone “happy.”   An arbitrator decision is based on the law – the arbitrator says who is right and wrong.

Should you be alright with your case being decided by an arbitrator?  In the usual course, we would advise against it because arbitration tends to be expensive and, unless you have a loser pays agreement, you’re not going to get that money back.  Most of the cost of arbitration goes to pay the arbitrator.  But in small claims court, that is not the case. Arbitrators are volunteers, most likely putting time in so that can one day market themselves as professional arbitrators and get those fees. 

We like small claims court arbitration.  For starters, there are many more voluntary arbitrators than judges, so if you opt for arbitration your case is going to be heard quicker.  In some places, arbitration is the default.   Arbitration is less formal.  So instead of standing in front of a judge on the bench, typically wearing a robe and sitting several feet off the ground, you’ll be dealing with a person sitting across the table in a suit and tie.  They may even be nice.  The rules of evidence are more relaxed, meaning you can, for example, tell the arbitrator what someone said the defendant said, which would otherwise be hearsay, and you can use documents without having to show they meet the criteria to be formally considered evidence. 

Arbitrators also have one important advantage that judges don’t: finality. Generally, an Arbitrators’ decision can’t be appealed except on very limited grounds.  Like, for example, you did not agree to arbitration but ended up in it.  Otherwise, its game over.

An arbitrator will not preside over a jury trial.  That’s because it’s the arbitrator’s job to determine the facts and the law. By contrast, if your case goes to the judge, the judge decides legal issues and instructs the jury about the law and how the facts should be applied.  In New York, like most places,  jury trials in small claims are very rare.  New York discourages them by only allowing the defendant (the person you’re suing) to request a jury trial and then charging them a fee, plus an additional amount to secure the plaintiffs costs in the event of a loss.  Those costs are really just the filing fees, which are pretty cheap, but that extra steps sends the message that jury trials are risky.

Jury trials require a jury to be selected, and also require additional time for the judge to explain the law to jurors.  In New York small claims practice, if the defendant requests a jury trial, and goes through the trouble of paying the additional fees and providing the bond, you can expect the trial to be rescheduled for a time when a jury is available.  We typically see a request for a jury in small claims court as the ultimate form of delay and not something a plaintiff should be pining for.  In a typical breach of contract action, a judge or arbitrator is fully capable of deciding the law and facts. 

In the next part we will look at proving your case, whether you’re in front of a judge, arbitrator or jury.

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