Arbitration | Mediation

Arbitration

What is arbitration?
How does NFA arbitration work?
What does it cost to arbitrate?
Where does NFA hold summary proceedings and oral hearings?
Who are the arbitrators?
How long does the arbitration process take?
What happens after the hearing or summary proceeding?
Can an NFA arbitration Award be enforced?

What is arbitration?

Arbitration is a process where the parties submit their dispute to a panel of impartial decision-makers (the arbitrators). Arbitration is similar to, but less formal than, a court proceeding. Its advantages include speed, simplicity, and affordability.

How does NFA arbitration work?

The first step is for the claimant to file an arbitration claim (Demand for Arbitration) with NFA. If the claim meets NFA's arbitration requirements, NFA will serve it on the opposing party (a respondent). The respondent will then have 45 days to submit an answer.

To encourage settlements, mediation is available as part of the arbitration process. NFA pays for the mediator if the parties use the service selected by NFA.

For cases that do not settle, NFA will appoint an arbitrator or arbitrators to decide the dispute. The total size of the claim dictates how many arbitrators there will be (one or three) and whether there will be an oral hearing or a summary proceeding (where the case is decided based on a review of the parties' written submissions).

What does it cost to arbitrate?

NFA charges a fee for filing an arbitration claim, which is based on the amount being claimed, exclusive of interest and costs. Filing fees for customer cases range from $50 to $1,550. NFA also charges a hearing fee, which is used to reimburse NFA for compensating the arbitrators. Hearing fees range from $125 to $5,100. Each party making a claim must pay both fees.

However, NFA may waive the filing fee if paying it is a financial hardship for the customer filing the claim. You should contact NFA's Arbitration Department if you are interested in asking for a waiver of the filing fee.

Where does NFA hold summary proceedings and oral hearings?

If the case is a summary proceeding, NFA will generally hold the summary in the home state of the customer. For oral hearings, NFA will generally hold the hearing in a city of the customer's choice or one mutually agreed to by the parties. To date, NFA has held summary proceedings in 49 states and hearings in more than 70 different metropolitan areas.

Who are the arbitrators?

NFA maintains a roster of more than 2,400 arbitrators throughout the country. The arbitrator pool is comprised of futures industry professionals, lawyers, accountants, and other business professionals located in 47 different states.

At NFA, the customer has the choice of having the case decided by a Member panel or a non-Member panel. A Member panel consists of persons who are NFA Members or associated with NFA Members and are generally knowledgeable about futures industry practices and procedures. A non-Member panel consists of a majority of persons who do not have a significant connection with NFA or an NFA Member.

How long does the arbitration process take?

Cases brought to NFA arbitration are processed in an average of 7.5 months from start to finish. However, cases that involve large claims, complex issues, and a number of parties may take longer to conclude.

What happens after the hearing or summary proceeding?

The arbitrators must make their decision (Award) within 30 days after the hearing or summary concludes. An Award does not contain reasons for the arbitrators' decision. It simply states the issues presented to and decided by the arbitrators, which party won, and the amount, if any, the opposing party must pay. NFA arbitration decisions are final and binding, and court review is much more limited than in litigation.

Can an NFA arbitration Award be enforced?

Yes. NFA is authorized to suspend any Member or Associate who fails to comply with an Award. The Award may also be enforced in any court with jurisdiction.

However, if you receive an Award against a firm or individual who is no longer in business, the Award may not be collectable. Therefore, if you are the party requesting NFA arbitration, you should consider before filing your claim whether it is worthwhile to spend your time and money pursuing the claim if the firm or individual is no longer in business.

Mediation

What is mediation?
How does NFA's mediation program work?
Who will mediate my dispute?
How much does mediation cost?
Are settlements reached in NFA mediation binding?
How can I become an NFA mediator?

What is mediation?

Mediation is a settlement process. Parties don't win or lose in mediation. Instead, they work together to find a solution they can agree to. An independent third party (a mediator) works with the parties to help them find that solution. The mediator does not decide who is right. The mediator also does not decide who pays or how much - only the parties can do that.

Mediation is different from arbitration and litigation. Arbitration and litigation are adversarial processes, where an independent third party (an arbitrator or a judge) decides who is right, who pays and how much.

NFA offers a mediation program, which is an affordable and efficient method for resolving disputes.

How does NFA's mediation program work?

If you are interested in initiating a mediation, review and complete the Request for Mediation form, which asks for general information about the dispute. You can submit the form to NFA by fax or postal mail. NFA will appoint a mediator after we receive a mediation request.

If you are the party who requested mediation, the mediator will contact you to explain the mediation process. The mediator will also contact the other party to explain the mediation process and invite the party to mediate. If you agree to mediate, the mediator will conduct a mediation conference.

If you reach a settlement, you will prepare and sign an agreement containing the terms of the settlement.

Who will mediate my dispute?

NFA will assign your dispute to one of several NFA attorneys who are trained mediators and familiar with the futures industry.

You may choose another mediator, and NFA has a list of mediation services that may be available to assist you.

How much does mediation cost?

If you agree to use NFA's mediation program, NFA will charge a $450 fee, where the parties each pay $225. The $450 fee, which is non-refundable, consists of a minimal administrative fee and covers mediator session fees of up to four hours. NFA will charge an hourly fee of $100 for the mediator's service beyond four hours.

You must pay the mediator's travel expenses if you ask the mediator to hold an in-person mediation conference outside Chicago. You must also pay your own travel expenses, your attorney's travel expenses, and your attorney's fees.

Are settlements reached in NFA mediation binding?

Yes. The settlement you reach in an NFA mediation is a contract that can be enforced in court just like any other contract. NFA Members and Associates can also be suspended from NFA if they do not pay a settlement reached through NFA's mediation program.

How can I become an NFA mediator?

Because NFA does not maintain a separate mediator roster, we currently do not accept applications from potential mediators.