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Arbitration

  1. What is arbitration?
  2. What is the difference between arbitration and mediation?
  3. How does NFA arbitration work?
  4. How can I file an Arbitration claim?
  5. What is NFA's role in the process?
  6. What does it cost to arbitrate?
  7. Where does NFA hold summary proceedings and oral hearings?
  8. How do I know if NFA will conduct a summary proceeding or oral hearing?
  9. Who are the arbitrators?
  10. How long does the arbitration process take?
  11. What happens after the hearing or summary proceeding?
  12. Can an NFA arbitration Award be enforced?
  13. Can I appeal an Arbitration Award?

1. 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.

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What is arbitration?

2. What is the difference between arbitration and mediation?

Mediation is different from both 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. Mediation is a settlement process where parties do not win or lose. Instead, they work together to find a solution they can both live with. 

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What is the difference between arbitration and mediation?

3. How does NFA arbitration work?

The first step is for the claimant to file an arbitration claim 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 either 20 or 45 days (depending on the claim amount) 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).

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How does NFA arbitration work?

4. How can I file an Arbitration claim?

To file an arbitration claim, a party may either file a customer or member claim online at NFA's website, download the claim form from NFA's website and subsequently transmit it to NFA, or a party can ask that NFA mail a claim form to them. Once you complete the claim form and submit your filing and hearing fees, NFA staff will review your claim to verify that we have jurisdiction to hear the dispute. If your claim meets all of NFA's requirements, and NFA does not require further information from you, we will proceed with serving your claim on the parties you have filed against. 

To access the claim forms click on the appropriate link:

For a Customer Claim

File claim online OR Download claim form

For a Member Claim

File claim online OR Download claim form

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How can I file an Arbitration claim?

5. What is NFA's role in the process?

NFA provides the forum for the resolution of the disputes, and therefore, must maintain a neutral role. NFA staff is available to answer the parties' procedural questions and act as the liaison between the parties and arbitrators. However, we are not able to remark on the merits of a claim, advise a party as to whether he or she should file a claim, comment on your chances of prevailing on the claim, or provide legal advice to any parties. 

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What is NFA's role in the process?

6. 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. View the filing fees table for customers in NFA's Code of Arbitration. Filing fees for member cases range from $750 to $4,400. View the filing fees table for Members in NFA's Member Arbitration Rules. 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 in customer cases 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.

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What does it cost to arbitrate?

7. 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.

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Where does NFA hold summary proceedings and oral hearings?

8. How do I know if NFA will conduct a summary proceeding or oral hearing?

The claim amount dictates whether NFA will conduct a summary proceeding or oral hearing. In both customer and member cases, for claim amounts that do not exceed $25,000.00, NFA will generally conduct a summary proceeding. For customers whose claim amounts are between $25,000.01-$50,000, either party to the proceeding may pay an additional fee and ask that NFA conduct an oral hearing. For all other cases that exceed $50,000.00, NFA automatically holds an oral hearing.  

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How do I know if NFA will conduct a summary proceeding or oral hearing?

9. Who are the arbitrators?

NFA maintains a roster of more than 2,000 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.

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Who are the arbitrators?

10. How long does the arbitration process take?

Summary proceedings, on average, take between 7-8 months from start to finish. Oral hearings that involve large claims, complex issues, and a number of parties may take 12-15 months from start to finish.

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How long does the arbitration process take?

11. 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.

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What happens after the hearing or summary proceeding?

12. 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.

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Can an NFA arbitration Award be enforced?

13. Can I appeal an Arbitration Award?

An arbitration award cannot be appealed either to NFA or the panel. In a word, it is final! Under certain circumstances, however, an award can be modified to correct a technical or clerical error (e.g. the wrong case number was included on the award, or a party's name was misspelled). 

In addition, it is a well-established principle that courts will not review an arbitration award on its merits. However, the law does provide for a court to review an arbitration award on limited grounds having to do with the fairness of the arbitration process. For further discussion on this topic, please refer to page 21 and 22 of NFA's Customer Arbitration Guide

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Can I appeal an Arbitration Award?
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