FINAL OFFER SELECTION
Final offer selection is an innovative arbitration approach that requires the arbitrator to select between the parties’ best and final offers (BAFOs). The arbitrator has no ability to ‘split the difference’ between the two or to fashion a settlement of his/her own creation. The parties each file their BAFO along with the facts and arguments that support it. Naturally, it requires each parties to put forward their very best position knowing that, if it is not seen to be the better one, the arbitrator will have to pick the other one.
This approach is most often used in labour relations in ‘interest arbitrations’ where the parties have been unable to negotiate a settlement at the bargaining table and both parties agree to submit their positions to arbitration. But it can be useful in other situations, particularly where the facts are not in serious dispute and the parties have already made some effort to reach a settlement without success.
The arbitrator is required to provide reasons for the selection.
I have been involved in more than a few court cases over the years where both sides have agreed that the case must be decided one way or the other and have said so to the judge, only to have the judge reject both positions (as judges will sometimes do) and make a decision that respects neither position. Both sides went away shaking their heads. It certainly would have been useful to have had the option of final offer selection in those cases.
For more information on Final Offer Selection, or other forms of private dispute resolution, please contact me.
(c) Michael V. Coyle, 2018