Compulsory Arbitration in Arizona: Hearing, Award, and Appeals

Compulsory arbitration in Arizona is a required, non-binding hearing that Superior Court sends money-only civil cases to before they can proceed to a full trial. State law caps the program at disputes worth up to $65,000, though a county may set its local threshold lower.¹ An attorney serves as arbitrator, holds a short hearing, and issues an award. Either party can reject that award and demand a regular trial, but the rules impose a serious financial penalty on anyone who appeals and fails to improve their result by at least 23 percent.

Which Cases Go to Arbitration

Two things have to be true for a Superior Court case to land in compulsory arbitration: no party is asking for anything other than money, and the amount in controversy fits within the county’s dollar limit.²

When you check your number against the cap, count punitive damages but leave out interest, attorney’s fees, and costs. A plaintiff suing for $60,000 plus fees still fits under a $65,000 limit because only the $60,000 counts.²

Cases That Stay Out

If any party asks for injunctive relief, a declaratory judgment, or any non-monetary remedy, the case does not go through compulsory arbitration, no matter the dollar figure. Appeals from municipal or justice court are excluded as well. Domestic relations, juvenile, probate, and real property title matters generally fall outside the program because they turn on non-monetary determinations.²

Parties who all agree can also ask the court to waive arbitration for good cause, or stipulate to a different method such as private mediation or binding arbitration. If an alternative method is chosen and then falls apart, the case goes to standard case management under Rule 16 rather than back into compulsory arbitration.

How the Case Gets Flagged

The plaintiff files a Certificate of Compulsory Arbitration with the complaint, stating whether the case is within the local cap, and serves it on the defendant. A defendant who disagrees files a controverting certificate with their answer, served on all parties, and the court decides.² Neither certificate can be used as evidence if the case later goes to a hearing on the merits.³

Who Serves as Arbitrator

The parties can stipulate to a specific arbitrator. Otherwise the clerk draws one at random from a list of eligible attorneys: active State Bar of Arizona members with at least four years’ standing who reside in the county, plus outside attorneys who have agreed to serve there. The clerk must appoint the arbitrator within 120 days after an answer is filed.⁴

Each side gets one no-questions-asked strike against the assigned arbitrator. You have 10 days from written notice of the appointment to use it. A party who enters the case after the appointment has 10 days from their appearance to request a change.⁴ Miss the window and you keep the one you were given.

Preparing for the Hearing

The arbitrator sets the hearing between 60 and 120 days out, with at least 30 days’ written notice unless the parties waive it. Good cause can shift that window.⁵

Each party files a prehearing statement before the hearing. Treat the witness and exhibit lists in that statement as the operative lineup for the hearing, because documents not listed may not qualify for the relaxed evidence treatment that makes arbitration faster than trial.

Inside the Hearing

Arbitration hearings are far less formal than courtroom trials and often finish in a few hours. The arbitrator administers oaths, rules on evidence, and decides both the facts and the law.⁵

The Arizona Rules of Evidence generally apply, with a significant shortcut: if a document was listed in the prehearing statement and appears to be what it claims, the arbitrator must admit it without the foundation testimony a trial would need. That shortcut covers medical bills, repair bills and estimates, prescriptions and devices, depositions and sworn witness statements, signed sworn expert statements, and business records.³ A treating doctor’s medical report has one extra condition: a copy must be disclosed at least 20 days before the hearing to be admissible.

The Decision and Award

The arbitrator has 10 days after the hearing to reach a decision, notify the parties in writing, and file a notice of decision with the court. After the parties have an opportunity to object, the arbitrator files a signed formal award. If no award is filed within 75 days of the notice of decision, the notice itself automatically becomes the award.⁶

Rejecting the Award: Trial De Novo

Because the award is non-binding, either party can reject it and demand a trial de novo, which starts the case over in Superior Court as if arbitration never happened. The notice of appeal must be filed within 20 days after the award is filed with the clerk.⁷

At filing, the appealing party deposits with the clerk either one hearing day’s compensation for the arbitrator or 10 percent of the amount in controversy, whichever is less. The court will waive that deposit only on a showing of financial inability to pay.¹ Standard fee waiver application forms are available through the Arizona Judicial Branch.⁸

One hard limit: a party who did not appear at the arbitration hearing or did not participate in good faith loses the right to appeal, absent good cause for the absence.³ Skipping the hearing and demanding a do-over isn’t an option.

The 23 Percent Rule

The number to run before you appeal is 23 percent. If the trial judgment is at least 23 percent more favorable than the arbitrator’s award, the appealing party gets the deposit back and the case ends on the trial result. If the judgment falls short of that threshold, the deposit is forfeited and the court orders the appealing party to pay three things: the county’s cost of compensating the arbitrator, the opposing party’s reasonable attorney’s fees for work caused by the appeal, and the opposing party’s reasonable expert witness fees connected to the appeal, plus taxable costs.⁷

Do the math before you file. If the arbitrator awarded $30,000, you need a trial judgment above $36,900 to avoid sanctions. The combined bill for the other side’s attorney and expert costs over a full trial can easily dwarf the deposit itself.

If No One Appeals: Don’t Forget the Judgment

When the 20-day appeal window passes without a filing, the award is not automatically a judgment. A party must ask the court to enter it as one. If no motion to enter judgment is filed within 125 days of the notice of decision, the clerk sends a warning that the case will be dismissed without prejudice unless someone moves within 30 more days. Miss that second deadline and the case is dismissed.⁶

Dismissal without prejudice means the win disappears. Refiling is possible only if the statute of limitations hasn’t run. If you prevailed at arbitration, filing the motion to enter judgment is the step that locks in your result.

1
Arizona Legislature. Arizona Code 12-133 – Arbitration of Claims
2
New York Codes, Rules and Regulations. Arizona Rules of Civil Procedure Rule 72 – Suitability for Arbitration or a Fastar Program
3
New York Codes, Rules and Regulations. Arizona Rules of Civil Procedure Rule 75 – Hearing Procedures
4
New York Codes, Rules and Regulations. Arizona Rules of Civil Procedure Rule 73 – Appointment of Arbitrator
5
New York Codes, Rules and Regulations. Arizona Rules of Civil Procedure Rule 74 – General Proceedings and Prehearing Procedures
6
New York Codes, Rules and Regulations. Arizona Rules of Civil Procedure Rule 76 – Posthearing Procedures
7
New York Codes, Rules and Regulations. Arizona Rules of Civil Procedure Rule 77 – Appeal
8
Arizona Judicial Branch. Fee Waiver and Deferral Forms