Arbitration in Commercial Cases in Cook County: Party Beware!

Effective October 1, 2016, mandatory arbitration is required in commercial cases filed in the Law Division of Cook County, Illinois wherein the damages alleged equal $75,000.00 or less. See Cook County Local Rules, § 25.1. A commercial case includes but is not limited to cases involving breach of contract, employment disputes, employment discrimination, civil and commercial fraud or conspiracy, interference with business relationships and shareholder disputes. Id. at § 25.2(a).

If the court finds that a case qualifies for mandatory arbitration, it will issue a Referral to Mandatory Arbitration Order and thereafter, the arbitration will be conducted at 222 N. LaSalle Street in Chicago, Illinois. Id. at § 25.3(a).

While there is no discovery in arbitration, fourteen (14) days prior to the arbitration hearing, the parties must submit various documents to the arbitrator, including but not limited to the pleadings, a detailed statement of the case, names of the witnesses expected to testify, documents expected to be placed into evidence, stipulations, reports, affidavits, summaries and an itemization of damages. Id. at § 25.7(2); § 25.8(a-g).

The parties are further required to meet, confer and exchange the above documents thirty (30) days prior to the hearing. Id. at § 25.8(h). Failure to timely submit the same may be grounds for a bad faith finding against the delinquent party. Id. at § 25.8(i).

The Illinois Rules of Evidence apply to the hearing except that the arbitrator may relax the rules in the interest of fairness and efficiency provided that due process is afforded to all parties. Id. at § 25.9(2). The arbitration hearing is similar to a trial. The parties typically submit opening statements, direct and cross-examinations and closing arguments; however, the format of the hearing will be determined by the arbitrator at the pre-hearing immediately prior to the hearing and after consultation with the parties. Id. at § 25.9(3)(a-e).

At the conclusion of the hearing, both parties must submit a summary of legal fees incurred in connection with the arbitration, which are utilized in the event a party rejects the arbitration award in favor of a trial in court. Id. at § 25.9(8)(a-b); § 25.11. After hearing all of the evidence, the arbitrator will issue an award or decision. Id. at § 25.10(c). The arbitrator shall provide notice to the parties of the same within one (1) business day of the hearing. Id.

Either party may reject the award so long as the party submits a Rejection Form accompanied by a $750.00 rejection fee within seven (7) business days after receiving the award. Id. at § 25.11(a). A party’s failure to timely and properly reject the award “will constitute a waiver of the party’s right of rejection.” Id. at § 25.11(c).

The summary of legal fees referenced above which are required to be submitted by all parties at the conclusion of the arbitration hearing is utilized in the event that a party rejects the award. “If the party rejecting the award fails to obtain a better result at trial, the party rejecting the award must pay the other party’s reasonable legal fees incurred in connection with the arbitration.” Id. at § 25.9(8)(a-b); § 25.11(d).

The arbitrator may make a finding that a party acted in bad faith in relation to the arbitration hearing, which includes but is not limited to a party’s willful refusal to attend or participate in the arbitration hearing. Id. at § 25.12(a-c). If the court finds that the party acted in bad faith, the court may sanction the party in an amount up to $1,000.00. Id. at § 25.12(d).

It is critical to know the rules associated with arbitrations in Cook County, including mandatory commercial arbitrations as well as other types of court ordered arbitrations, which are subject to varying rules and regulations. Accordingly, if you are involved in an arbitration as a plaintiff, defendant or witness, please contact Jennifer Burt at Lavelle Law, at 312-888-4111 to aid you through this process.