Arbitration Case Flow Definitions

Step 1: Claim Received and Reviewed
A claim is reviewed for the minimum requirements of a properly signed Submission Agreement, proper fees, and sufficient copies of the Statement of Claim. The Statement of Claim should include the dollar amount of damages requested, and the type of claims being made. Any deficiencies can delay the service of the claim.

 

  • Filing Fee
    Pursuant to Rules 12900(a) and 12302(c) in customer disputes, Rules 13900 and 13302(c) in industry disputes, a Filing Fee is charged at the time the claim or an answer requesting damages (e.g. counterclaim, cross claim, third party claim) is filed with FINRA Dispute Resolution. The filing fee is nonrefundable and must be paid at the time of filing of a claim. In very limited circumstances, the Director may grant a fee payment waiver based on financial hardship. The fee calculator is available to help parties determine the filing cost of their claim. Parties should use the calculator to avoid delays in the process due to potential filing fee deficiencies.

  • Injunctive Relief Fees
    Pursuant to Rule 13804 (b)(6), in an industry arbitration, a member firm or associated person who seeks a temporary injunctive order in court shall pay a total non-refundable injunctive fee surcharge of $2,500 at the time the party files its Statement of Claim and Request for Permanent Relief as required by Rule 13804(a)(2). Where more than one party seeks such relief, all requesting parties will pay the fee. In their discretion, the arbitrator(s) may determine that a party will reimburse another party for part or all of any non-refundable injunctive fee paid to FINRA Dispute Resolution. The injunctive fee(s) are in addition to all other filing fees, hearing deposits, or costs that may be required.

 

Step 2: Claim Served on Respondent
Dispute Resolution serves the claim on the named Respondent(s) with a cover letter explaining the process and setting a time for reply to the claim.

 

  • Member Surcharge Fee
    Pursuant to Rule 13901, a member surcharge fee is assessed against each member firm that is named as a party to arbitration, or who employed an associated person at the time of the events that gave rise to the dispute. The surcharge is nonrefundable and is assessed when FINRA Dispute Resolution serves the claim naming the member firm, or associated person. No member firm will be assessed more than one (1) surcharge in an arbitration.

 

Step 3: Answer Received and Analyzed
Dispute Resolution reviews Answers to determine if parties need to be added (in the case of a third-party claim), and for required fees, Submission Agreements, and proper certificates of service.

 

  • Amended Claim Fees
    Pursuant to Rules 12311 or 13311, any claim that is filed and later amended to increase the amount is dispute will be subject to increased fees. FINRA Dispute Resolution will recalculate filing fees, process fees, and surcharges based upon the increased claim amount(s).

 

Step 4: Arbitrator List Selection
Arbitrator lists are generated by a computer on a random basis. The computer-generated lists of arbitrators will be sent to the parties with arbitrator disclosure information. The parties will rank and/or strike the arbitrators on the list. Based on ranking, availability, and conflicts, arbitrators will be assigned to the case.

 

  • Member Prehearing Process Fees
    Pursuant to Rules 12903(a) or 13903(a), in a dispute which is more than $25,000, member firms are assessed prehearing process fees of $750.00 at the time the parties are sent arbitrator lists in accordance with Rules 12403(b) or 13403(b). Prehearing process fees are nonrefundable.

     

  • Member Hearing Process Fee
    Pursuant to Rule 12903(a) or 13903(a), a member firm must pay a nonrefundable hearing process fee when the parties are notified of the date and location of the first hearing session under Rules 12600 or 13600.

 

Step 5: Prehearing
A prehearing conference is set soon after the arbitrators are appointed. The parties and the arbitrators participate in the conference. At the conference, the arbitrators decide procedural matters, such as discovery between the parties, and set hearing date(s). Decisions or rulings made 

during the conference are entered into an order signed by the arbitrator(s) and distributed to the parties by the case administrator.

 

  • Adjournment Fees
    Pursuant to Rules 12601 or 13601, if an adjournment requested by a party is granted after arbitrators have been appointed, the party requesting the adjournment will pay a fee equal to the initial deposit of hearing session fees under Rules 12902 or 13902. The arbitrators may waive these fees in their discretion. If more than one party requests the adjournment, the arbitrators may allocate adjournment fees in their discretion. Under Rules 12601(b)(2) and 13601(b)(2), requesting parties will be required to pay an additional $100 per arbitrator fee for any postponement request made and granted within three business days before a scheduled hearing session.

  • Hearing Session Fees
    Hearing session fees (forum fees) accumulate each time the parties and arbitrators meet in person or by telephone. Rule 12100(n) describe a hearing session as any meeting with an arbitrator, including a prehearing conference, which lasts four (4) hours or less. Under Rules 12902 and 13902, hearing session fees will be charged for each hearing session. The total amount chargeable to parties is based on the amount in dispute. The arbitrators assess hearing session fees either in interim orders or in the final award.

 

Step 6: Discovery
The voluntary exchange of documents is encouraged. The discovery guide is available to help the parties to determine the categories of documents routinely produced in arbitrations. Subpoenas and Orders to Appear/Produce are also available to parties. The arbitrators may rule on discovery disputes and order documents to be exchanged. Based on the schedule established during the prehearing, the parties will conduct discovery.

 

  • Settlements-Forum Fee Allocation
    Pursuant to Rules 12701 or 13701, the parties to an arbitration may settle their dispute at any time. While Dispute Resolution does not need to know the terms of a Settlement Agreement, the parties are still responsible for payment of any fees incurred, including fees for previously scheduled hearing sessions under Rules 12902(d) or 13902(d). If the parties fail to agree on the allocation of outstanding fees, the fees shall be allocated as provided in Rules 12701(b) or 13701(b).

 

Step 7: Hearings Held
The arbitrators conduct each hearing in the manner they think will be the most effective in permitting the full and fair presentation of the evidence and arguments of the parties. The hearing is the parties' opportunity to present their evidence and testimony to the arbitrator(s). The parties must be prepared to offer proof in support of their claims or defenses. Hearings last an average of three to four days.

 

  • Hearing Session Fees
    Hearing session fees (forum fees) accumulate each time the parties and arbitrators meet in person or by telephone. Rule 12100(n) describe a hearing session as any meeting with an arbitrator, including a prehearing conference, which lasts four (4) hours or less. Under Rules 12902 and 13902, hearing session fees will be charged for each hearing session. The total amount chargeable to parties is based on the amount in dispute. The arbitrators assess hearing session fees either in interim orders or in the final award.

 

Step 8: Arbitrators Deliberate
The arbitrators decide the outcome of the case after all parties complete their presentations and the arbitrators close the record. Decisions are based on the pleadings, the evidence, and the testimony admitted at the hearing. The arbitrators may also request additional facts and/or briefs from the parties before making their award.

 

Step 9: Award Written and Served
The arbitrator(s) endeavor to make a final decision within 30 days after they close the record. The parties receive a written document called the "award" describing the determination of the arbitrators. The arbitrator(s) are not required to write opinions or provide reasons for their decision. Dispute Resolution serves awards by registered or certified mail, or by other means allowing notification to all parties at the same time.

 

  • Forum Fees
    Pursuant to Rule 13902 for industry disputes, and Rule 12902 for customer disputes, the arbitrators will determine the amount chargeable to the parties as Forum Fees. The arbitrator(s) may direct another party to reimburse any filing fee, hearing session deposit, adjournment fee, and interim hearing session fees paid by a party.