Originally prepared by Lucia Benabentos of the Cornell Law School Securities Law Clinic.
Arbitration hearings are the equivalent of a courtroom trial, but less formal. During hearings, all the parties meet to hear the case and present supporting evidence. Usually, hearings begin with a brief statement by the panel, followed by opening statements by each party. Then, the claimant may present his or her case, including evidence, witness testimony and experts. The opposing party has a chance to cross-examine all the witnesses presented. Then the roles reverse. The respondent may present his or her evidence and witnesses, leaving the claimant a chance to cross-examine these witnesses. Unlike in a trial, the panel may pose questions to the witnesses at any point to clarify any issues. Some testimony may even be taken by phone, depending on the availability and the potential costs for causing a witness to appear before the panel of arbitrators. Finally, each party offers their closing statement, and the panel goes into deliberations.
The rules of evidence (i.e.: hearsay, admissibility of evidence) that operate in the courtroom do not operate to the same extent in arbitration. Arbitrators tend to be much more flexible than judges in allowing evidence to come in.
According to FINRA, most hearings tend to last between 3 days to a week. Their informal nature allows for flexibility in the schedule and presentation of evidence. However, hearing fees are calculated per day, making a lengthier arbitration much more costly than a shorter one.