Under California law, disputes can be sent to arbitration in two different ways. First, relatively small cases, in the larger counties, are automatically sent to judicial arbitration. Code of Civil Procedure Section 1141.10 et. seq. Second, when the parties so agree, any size case can be sent to arbitration. Code of Civil Procedure Section 1280 et. seq. The two types of arbitration are quite different.
Judicial arbitration exists to deal with disputes involving less than $50,000. In every California Superior Court with 18 or more judges, in other larges in the more populous counties, most disputes involving less than $50,000 are sent to judicial arbitration. CCP 1141.11. Thus, if you file such a case in Superior Court, it is likely to be sent to arbitration by the judge. In judicial arbitration, if one side does not like the award given or not given by the arbitrator, he or she can request a trial de novo, meaning that the case will then be sent to the Superior Court for decision. CCP 1141.20.
The second type of arbitration is contractual arbitration. Any dispute can be sent to arbitration if the parties agree to resolve their dispute in that manner. The typical way for parties to agree to arbitration is when an arbitration clause is included in a contract. The standard California Association of Realtors form for sale of real estate, for example, includes a check-the-box arbitration clause, which, if the parties sign off on it, sends all disputes arising out of that contract to arbitration.
If the contract includes an arbitration clause, whichever party has a grievance starts the process by sending the other party a demand for arbitration. If the other side refuses to arbitrate, the aggrieved party can file a lawsuit in Superior Court of compelling arbitration. Alternatively, if one party files litigation in Superior Court, regarding a matter subject to arbitration, the other party can respond to the litigation by filing a petition to compel arbitration. As a rule, the Superior Courts favor petitions for arbitration, and will enforce arbitration clauses, unless there is a good reason not to.
Arbitration is a complex and rapidly growing area of the law. The general rule is that both federal and California state law favor the enforcement of arbitration clauses. Thus, if you sign such a clause in a contract, it is probably enforceable. There are, however, a number of rules about exactly what disputes can and cannot be sent to arbitration, how arbitration is coordinated with litigation and so forth. The basic rules are set out in CCP Section 1280 and following sections. In addition, there are portions of federal law, and specialized California laws, which apply in some cases. In general terms, most arbitrations are conducted in accord with more or less the same rules as a court proceeding, although arbitrators are far more free than are judges to ignore rules which they do not like.
As a rule, in contractual arbitration, there is virtually no way to appeal from the award of the arbitrator. Unlike judicial arbitration, one cannot request a trial de novo in contractual arbitration. In theory, one can contest an arbitration award, but the grounds for doing so are extremely limited. CCP 1286.2.