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Arbitration and Mediation FAQs

Arbitration is an adversarial process 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 accept.

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, NFA is 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 a party's chances of prevailing on the claim, or provide legal advice to any parties.

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. The arbitrators have the authority to order that the hearing take place virtually. To date, NFA has held summary proceedings in 49 states and hearings in more than 70 different metropolitan areas.

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 $50,000.00, NFA will generally conduct a summary proceeding. For customers whose claim amounts are between $25,000.01 and $50,000, a customer may pay an additional filing and hearing fee and ask that NFA conduct an oral hearing. For all cases exceeding $50,000.00, NFA automatically holds an oral hearing.

NFA maintains a roster of more than 1,700 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.

Summary proceedings, on average, take between seven to eight months from start to finish. Oral hearings that involve large claims, complex issues, and a number of parties may take twelve to fifteen months from start to finish.

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

Yes, NFA is authorized to suspend any Member or Associate who fails to comply with an arbitration award. The award may also be enforced in any court with jurisdiction. However, if a party receives an award against a firm or individual who is no longer in business, the award may not be collectable. Therefore, parties requesting NFA arbitration against a firm or individual no longer in business should first consider whether pursuing the claim is worthwhile before filing.

No, arbitration awards are final and cannot be appealed either to NFA or the panel. However, under certain circumstances, 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).

Additionally, it is a well-established principle that courts will not review the merit of an arbitration award. The law provides for court review of an arbitration award only on limited grounds having to do with the fairness of the arbitration process.