The Ultimate Guide to Arbitration in Colorado

When you find yourself in a legal dispute, your contract may require arbitration in Colorado instead of allowing you to file a lawsuit in court. Arbitration is a form of alternative dispute resolution in which the parties present their case to a neutral third-party arbitrator, rather than to a judge or jury. While arbitration takes place outside the courtroom, it often resembles a court proceeding, with testimony, evidence, and legal arguments from both sides.

In Colorado, the arbitration process is commonly used in employment, consumer, and commercial disputes. Arbitration is a form of alternative dispute resolution in which the parties resolve their conflict outside of court. An impartial third-party arbitrator, or panel of arbitrators, is chosen to hear the case and make a binding decision. The hearing takes place outside the court, but is much like a court proceeding in that both sides present testimony and evidence. As arbitration is considered a method of relieving court congestion, the arbitrator's decision is almost always final, with limited options to appeal.

• Arbitration and court cases follow different rules in Colorado, particularly regarding costs, discovery, and appeals.

• Arbitration is often faster than litigation, but it can involve higher upfront fees depending on the type of dispute.

• Discovery and motion practice can be more limited in arbitration than in Colorado district courts.

• Arbitration decisions are generally final, with very limited opportunities for appeal.

• Whether arbitration is a suitable option depends heavily on the contract language, the type of dispute, and the stakes involved.

People are often required to arbitrate because a contract requires arbitration, even if they would prefer to file a case in court. Understanding how arbitration differs from Colorado district court litigation can help you set realistic expectations early and determine the best approach to a dispute.

One of the biggest differences between arbitration and court is how costs are handled. Court cases typically involve filing fees and litigation expenses, but judges are paid by the state. In arbitration, the parties typically cover the arbitrator’s fees and the administrative fees charged by the arbitration forum, such as the American Arbitration Association.

In many employment and consumer disputes, arbitration rules or Colorado law may require the employer or business to cover most forum fees, so the process is not prohibitively expensive for individuals. In commercial or business-to-business disputes, costs are often split between the parties or allocated according to the contract’s arbitration clause.

Even when fees are shared, arbitration can involve higher upfront costs than court, particularly in complex cases or disputes requiring multiple hearing days.

Arbitration generally involves more limited discovery than litigation in Colorado district court, based on applicable arbitration rules and the Uniform Arbitration Act. Arbitrators often limit the number of depositions, written discovery requests, and expert disclosures to maintain process efficiency.

Dispositive motions, such as motions to dismiss or for summary judgment, may be allowed in arbitration but are typically less common than in court. By contrast, Colorado court rules provide a more structured and predictable discovery and motion process, which can be important in complex or document-heavy cases.

Arbitration is often promoted as a faster alternative to litigation, and in many cases, it is. Fewer procedural steps and limited discovery can shorten the overall timeline. However, arbitration is not always the faster option. Scheduling availability, the number of arbitrators, and the complexity of the dispute can all impact the duration of the process.

Court cases may take longer due to crowded dockets, but they also offer more procedural tools and clearer timelines governed by court rules.

Arbitration decisions are final except in very limited circumstances, and awards are extremely difficult to challenge. Courts generally cannot reconsider the merits of an arbitrator’s decision unless an arbitrator exceeded their authority or other narrow legal standards are met.

In contrast, parties in Colorado district court cases usually have the right to appeal based on legal or procedural errors. This finality is a key reason arbitration can feel efficient, but it also increases the stakes of the initial decision.

Disputes often arise over whether a case must be arbitrated. A party may file a motion to compel arbitration, while the other side may argue that the arbitration agreement is unenforceable.

In Colorado, courts may consider factors such as procedural and substantive unconscionability when evaluating arbitration clauses. These challenges are highly fact-specific and usually must be raised early in the case. Once arbitration is compelled, options to return to court are limited.

Arbitration is often driven by an arbitration clause included in a contract between the interested parties, requiring disputes to be resolved through arbitration. This clause will govern any breach of contract. It will typically specify the arbitration rules that apply (based on jurisdiction and the type of dispute), the kinds of evidence and hearings that will be allowed, and the binding nature of the arbitrator’s decision. The parties to a dispute can also just decide to have it decided by an arbitrator and submit their case.

Small businesses, individuals, and business-to-business cases have common issues and are often subject to arbitration. Car accidents, slip-and-falls, dog bites, and product liability cases typically do not go to arbitration. Sometimes arbitration is in both parties' best interests; sometimes it appears to favor one over the other.

Consider the following example:

• After Republic Airways Holdings acquired Midwest Airlines in 2009, more than 400 Midwest Airlines flight attendants lost their jobs and were replaced by lower-paid workers. The union contract for Midwest flight attendants included special job protections in case of a merger or acquisition. The collective bargaining agreement, the contract between the union and the airline, required any disputes to be resolved through arbitration rather than the courts. The Association of Flight Attendants (AFA) followed this process and filed a grievance. Because both parties had agreed to arbitration, an arbitrator heard the case and found that Republic Airways had breached the contract, resulting in a settlement for the former employees.

Alternatively, arbitration can work against employees when a provision requiring arbitration prevents them from banding together to file a class-action lawsuit. 

Arbitration can be seen as a dispute-resolution method that favors employers because it is private, not subject to a jury trial, which is often seen as favorable to plaintiffs (employees in this case), and because disputes and resolutions are generally private. Uber would have preferred to settle the cases individually and privately.

Parties can exercise additional control over the arbitration process by adding specific provisions to their contracts’ arbitration clauses before a dispute arises or, when a dispute arises, by modifying certain aspects of the arbitration rules to suit a particular dispute if both parties agree.

You should consider an arbitration clause in your standard contract if at least one of these factors is present:

1. Any disputes are likely to be very technical. If having a knowledgeable industry professional decide the dispute is very important (e.g., an architect, engineer, doctor, or reinsurance expert), you might want an arbitrator with that knowledge instead of a judge or jury without that expertise.

2. Keeping the proceedings confidential (and not publicly available in court filings) is important. (Note, however, that if either party moves to reverse the arbitrator’s decision, much of your arbitration proceeding could become part of a court record.)

3. You want to prevent a class-action lawsuit. (A class action suit can often be precluded in an arbitration agreement; it is less simple without an arbitration agreement.)

4. You want to arbitrate because other parties on the same project or deal have arbitration provisions. (For example, if the owner and general contractor on a construction project are bound to arbitrate, the owner and architect may also want to agree to arbitrate in case the architect is implicated in claims between the owner and general contractor.)

5. There is a chance that you may have to enforce a judgment in a foreign court. The New York Convention allows the winning party in an arbitration to enforce its judgment abroad much more easily than if the judgment had come from a U.S. court, which is important if the loser’s assets are located abroad.

Although arbitration is generally less formal than court litigation, it still follows a structured legal process with defined ground rules designed to ensure fairness and due process.

Once the arbitration has begun, you should prepare as if it were a court case: 

• Locate and preserve any relevant documents 

• Identify documents that support your claim and any documents that may be privileged 

• Collect statements from relevant witnesses

• Identify and retain necessary experts. 

An attorney can help by determining the governing law and rules of procedure and helping prepare the case for an organized and efficient presentation to the arbitrator.  A case may go to arbitration in one of two ways:

1. One side initiates via an arbitration clause in a mutually binding contract

2. Both parties decide that arbitration will serve their interests better than litigation

Either of these methods serves as an agreement to arbitrate.

Certain expedited procedures apply to cases where the disputed damages are below $75,000. These procedures provide for notice of the arbitrator's appointment and of the hearing by telephone, and for the award to be rendered no later than 14 days from the date of the hearing's closure.

When one party decides to invoke the arbitration clause (the most common way to initiate arbitration), they draft a Demand for Arbitration. This document should summarize the type of claim(s) with a brief, clear statement that sets out:

• the nature of the dispute,

• the relief (resolution) they are seeking,

• the scope of the damages,

• the official names and addresses of all parties; and

• the arbitration clause of the contract, quoted in full, and including the date of the document.

What is the Deadline to Answer the Statement? 

There is no state-mandated deadline for responding to an arbitration demand under the Colorado Uniform Arbitration Act (CUAA). C.R.S. 13-22-209 only outlines the initiation process for proceedings. In practice, deadlines are determined by the specific rules of the chosen arbitration forum. Often, the arbitrator has discretion to establish submission and response deadlines. The American Arbitration Association (AAA) Commercial Rules recommend that upon notice of the demand, the other party file their response within 14 days, and that a failure to do so is treated as a denial of the claim.

Note that arbitration rules can vary if the dispute is international in scope, and generally, failing to respond is treated as a denial of claim. 

How Should the Statement be Formatted?

There is no prescribed form for the answering statement, but it should briefly and clearly include a request for the desired number of arbitrators if this is not specified in the arbitration clause. If the respondent wishes to assert any counterclaims, these must be included in the answering statement, along with any filing fee.

The statement should also include any objections to the arbitrator’s authority or the validity of the arbitration agreement. These issues should be challenged at the start; otherwise, under Colorado law, the right to challenge the arbitration in court is permanently lost. 

If an arbitrator has not already been selected by the parties, after the filing of the submission or the answering statement, or upon the expiration of the time within which the answering statement is to be filed, the arbitration authority sends each party a list of proposed arbitrators. The parties then strike any names they object to, and number the remaining names in order of preference. Where parties are unable to find a mutual choice on a list, additional lists may be submitted at the request of both parties.

If the parties cannot agree on an arbitrator, the arbitration authority will make an administrative appointment, avoiding any arbitrator whose name was crossed out by either party.

To prepare for the arbitration hearing, parties should assemble all documents likely to be needed at the hearing, along with duplicates for the other parties and the arbitrators, as early as practicable. A party’s witnesses should be interviewed and briefed on the issues on which they are likely to be cross-examined. Witnesses from the other side who are candidates for cross-examination should be identified. Determine early on which witnesses to cross-examine.

The Colorado Revised Uniform Arbitration Act allows arbitrators to issue subpoenas for witnesses to attend hearings and for records to be produced. Colorado law also lets arbitrators allow depositions and pre-hearing discovery for non-parties. If someone doesn’t comply with a subpoena, the Colorado District Court can enforce it. Parties should consider whether subpoenas may be necessary and take steps to ensure compliance with local laws and regulations. The American Arbitration Association (AAA) Rules permit subpoenas to be issued on the request of any party or independently.

Additionally, any necessary inspections or investigations should be conducted as soon as possible. A party representative should accompany the arbitrators, unless they are specifically authorized to proceed without a representative or the other party fails to attend after notification.

Arbitration hearings are conducted somewhat like court trials, except that arbitration is less formal. Arbitrators are not required to follow strict rules of evidence. They must hear all of the evidence material to an issue, but they may determine for themselves what is relevant. Arbitrators are therefore inclined to accept evidence that might not be allowed by judges. The arbitrators have broad discretion to direct the exchange of information, on their own initiative or at the request of the parties. The parties, however, are required to exchange exhibits for use at the hearing at least five days before the hearing. The arbitrators may also conduct inspections or investigations if necessary.

The arbitrators have wide discretion to shape the hearing procedure, but are limited by the due process requirements that each party is treated equally, has the right to be heard, and is given a fair opportunity to make its case.

The claimant typically presents the evidence to support its claim first, followed by the respondent’s presentation of evidence in defense. The arbitrators, however, may vary this procedure at their discretion.

The award is the arbitrator's decision on the matters submitted to them under the arbitration agreement. If there is more than one arbitrator, the majority decision is binding, unlike a court judgment, which may be appealed. The purpose of the award is to dispose of the controversy finally and conclusively. It is made within the limits of the arbitration agreement and the rules applicable to each claim submitted. Arbitrators are not required to write opinions explaining the reasons for their decisions; however, in some cases, both parties may request a reasoned opinion, or the arbitration agreement may provide for one.

Arbitration can be an effective way to resolve disputes outside of court; however, it may not be the right fit for every situation. The differences between arbitration and the Colorado district court can have lasting consequences for cost, timing, and appeal rights.

If you are facing a dispute involving an arbitration agreement or want help evaluating your options, consult with an experienced attorney. To discuss your situation, schedule a consultation with Robinson & Henry or call us for a case assessment at 303-688-0944.

For related guidance, see our overview on mediation and arbitration or learn more about our litigation services.