Arbitration and the National Arbitration Forum

Arbitration is a process where a supposedly unbiased third party (the arbitrator) decides a legal dispute between two parties. The arbitrator will make his decision based on the facts presented by both parties as they apply to federal and state laws. However, an arbitration award is not the same as a legal judgment entered in a lawsuit.

The National Arbitration Forum (NAF) is a private organization; it is not affiliated with your state government or any court system and is probably the most well known of the consumer arbitral forums. Basically, their main purpose can be described as verifying the validity of a debt. If and when a debt is verified, so to speak, an award will be entered in favor of the claimant (the creditor).

This process usually takes between 3 and 12 months. After an award is issued, the creditor will usually determine whether the account is suit-worthy or not by weighing the debtor’s ability to actually pay against the expense and time involved in filing a lawsuit in the debtor’s state court to “confirm” (basically, asking a court to agree with the arbitrator that the debt is owed to the creditor) the arbitration award and collect the debt.

The general arbitration process in a consumer debt matter usually proceeds as follows:

• Creditor files a claim with the National Arbitration Forum.
• The debtor is notified of the claim, the balance owed and to whom.
  

  Notification can be by the postal service, a reliable private service, fax, email, electronic or computer transmission.

• The debtor has 20-30 days to file a response if they dispute the claim or wish to defend against the claim. If the debtor does not respond, typically an award is entered against them automatically. It is important to carefully review the documents that accompany the claim to determine the exact amount of time before the response is due. The response, per the NAF’s instructions located on their website, may be filed in a few different ways. Also, as described further on NAF’s website, the respondent should also submit a copy of their response to the claimant. (See NAF’s website to determine if the respondent must also file a proof of service form with their response to NAF).
  

  Blank Response and Proof of Service forms are available to download and print on NAF’s website.

• Typically, a Second Notice of Arbitration is sent out once the Forum receives proof of service (basically, a document sent by the Claimant to NAF indicating that they have provided the Respondent with a copy of the Claim) from the Claimant regarding the initial claim. If the creditor files a proof of service.
  

  The debtor typically has 14 days to respond to the Second Notice of Arbitration if he or she disputes the claim or wishes to defend against the claim. Again, it is important for the debtor to review the correspondence from the NAF in order to determine when the response is due.

• If a debtor decides to call the NAF, they can ask if the Claimant has filed “Proof of Service.” If they have not, the Debtor may ask the NAF representative to explain the debtor’s options. According to the NAF’s rules posted on their website, the Claimant only has 90 days from the date of filing the Claim to submit a proof of service form to the NAF. If they don’t submit the form in time, then the NAF may dismiss the Claim, which means the Creditor must re-file. However, even if the Claimant has not filed a proof of service, if the debtor files a response to the claim the Claimant is no longer obligated to file the proof of service. In other words, by filing a response, the debtor is in essence confirming that they received the claim. 
• The arbitrator will review both sides of the matter and make a decision.
• Once the arbitrator makes the decision, the arbitrator issues an Award.
• NAF then notifies both parties of the decision and the Award.
• After receiving an award in their favor, the Claimant may then either attempt to resume collection efforts on the debt or, when the debtor refuses to pay for example, the Creditor may decide to file suit in the debtor’s state court to have the award confirmed (This is, basically, asking a court to agree with the award and enter a judgment agreeing with the award. This is a prerequisite for the creditor if they want to attempt to enforce a judgment later on down the road. Remember, the reason the creditor has to take an arbitration award to court is because, as is indicated above, arbitral forums like the NAF are merely private dispute resolution organizations. The NAF is not a court, so its decisions are not enforceable. A court would have to adopt the decision before the law will enforce anything, and then it’s the court’s judgment that is enforced.).

Additional Information:

You can find additional information, including the Forums Code of Procedure, on the National Arbitration Forum’s Website- http://www.arbitration-forum.com/. You can also call them at 1-800-474-2371 or email them at info@arb-forum.com.

Sample Arbitration Documents