Pendulum arbitration

Article summary

Pendulum arbitration, otherwise known as final offer arbitration (or "FOA") or baseball arbitration, is a type of interest arbitration in which the arbitrator chooses one of the parties' proposals on each (or perhaps all) disputed issues. For example, in the case of labor collective bargaining, a trade union may demand a wage increase of 7% and the management may offer 3%. The arbitrator's decision has to choose between awarding a 3% or a 7% increase. This procedure is opposed to conventional interest arbitration, in which the parties present evidence and the arbitrator acts as fact-finder and crafts an award. In disputes over labor contracts, this dispute resolution procedure is known to be a common type of contract arbitration. Perhaps the most well-known instance is salary arbitration in Major League Baseball, where a certain class of players may elect to arbitrate their salary instead of accepting their team's salary offer. Final-offer arbitration is widely used to determine public union contracts in the United States, either as a substitute for collective bargaining or as a mechanism to determine the contract when bargaining has failed. A primary purpose and effect of FOA is to encourage the parties to arrive at a settlement. Parties who fail to compromise during negotiations risk a total loss on some or all arbitrated issues under FOA.…

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