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"I'll see you in court."

It's a declaration you might hear on a TV show, in the movies, or perhaps even in your real life, as one aggrieved party threatens to take legal action against another. But while many disputes are handled in a courtroom, disputes between investors and brokers are typically resolved in another venue: an arbitration forum.

When opening brokerage accounts, your investment firm will many times include a pre-dispute arbitration clause in your new account agreement stipulating that any future disputes will be resolved through arbitration. But even if your investment firm doesn't include such a clause, you, as the customer, can still demand arbitration.

For the most part, brokerage firm and customer disputes will be resolved through the Financial Industry Regulatory Authority (FINRA) arbitration forum, which saw more than 2,500 arbitration case filings in the first nine months of the year.

Arbitration cases handled by FINRA Dispute Resolution differ from court cases in several key ways.

Chrystal Loyer, a case administrator for Dispute Resolution, noted that arbitration is a less formal process than litigation, resulting in lower overall costs and faster turnaround times than typical court cases. Unlike litigation, FINRA rules also limit motions to dismiss that an opposing party can make before the other party finishes presenting his or her case, allowing both parties a greater opportunity to fully argue their cases.

"FINRA's Dispute Resolution program provides a number of features to ensure the forum is fair to all participants, and affords investors numerous protections," Loyer said.

Here's how arbitration works:

Arbitration versus Mediation

If an investor believes he or she is entitled to damages from a broker, the first step is to file a Statement of Claim with FINRA. This consists of a written statement in which the investor describes the dispute, specifies the amount of money or other damages sought, and includes any documents that support the claim.

Claimant filing fees range from $50 to $2,250, depending on the amount of damages requested, and may be waived in the case of financial hardship. Brokerage firms are responsible for additional fees and bear the majority of the costs of FINRA arbitration. Arbitrators allocate additional fees between the parties based on the number of hearing sessions held. (Learn more about fees here.)

After receiving a claim, FINRA staff reviews the pleadings to determine the nature of the dispute and how many arbitrators are needed for the case. The broker or firm is then served with the claim and given a period of time to respond.

The case will be heard by either a single arbitrator, or a panel of three arbitrators, depending on the amount of damages requested. For claims in which the disputed amount is $50,000 or less, if the claimant does not request a hearing, a single arbitrator decides the case by reviewing documents submitted by both the claimant and the respondent (the party against whom the claim was filed).

Both claimants and respondents play a role in selecting the arbitrators on their cases. FINRA provides a randomly generated list of arbitrators, who are trained FINRA contractors, to both parties. Each party has the right to reject arbitrators on that list and rank their preferences. FINRA then appoints the highest ranked arbitrators from the common choices.

Arbitrators fall into two categories: public arbitrators and non-public arbitrators.

Public arbitrators have no affiliation with the securities industry while non-public arbitrators have some connection to the securities industry, either because they once worked in the industry or because they have clients in the industry.

In investor cases with one arbitrator, the arbitrator is always selected from FINRA's public arbitrator list, meaning those with no financial industry work experience. In cases with three arbitrators, claimants and respondents are provided with lists of both public and non-public arbitrators, but either party may opt to have an all-public panel.

FINRA assigns a hearing location based on where the claimant lived at the time of the original dispute. There are 71 hearing locations in the U.S., including at least one in each state and one in San Juan, Puerto Rico and London.

Once arbitrators are selected, a hearing is scheduled and the parties and their attorneys exchange documents and identify witnesses through what's known as a discovery process, which, unlike the discovery that takes place in court, doesn't include depositions, interrogatories and certain other elements, allowing it to take place on a shorter timeline.

Claimants may choose to represent themselves instead of working with an attorney but doing so may put a claimant at a disadvantage since respondents are almost always represented by counsel. Investors seeking attorneys can seek referrals from organizations such as the American Bar Association and the Public Investors Arbitration Bar Association. Those who are unable to afford an attorney may be eligible for free legal representation from legal clinics run through several universities. Find more information about finding legal representation for arbitration proceedings here.

Unlike the hearings in court cases, arbitration hearings are typically held in conference rooms with all the parties sitting around a table. As with court cases, however, each side presents an opening and closing argument, may call and cross-examine witnesses and may object to evidence presented by the opposing party.

After a hearing concludes, arbitrators usually announce a legally binding decision in the case within 30 days. Brokers that fail to pay arbitration awards may have their professional licenses suspended by FINRA. Those wishing to appeal an arbitration decision may seek to have the decision overturned in court under very limited grounds.

Filing for arbitration should not be confused with filing an investor complaint. If an individual wishes to notify FINRA of potential fraud by a brokerage firm, he or she may reach out to FINRA's Investor Complaint Center. If an investor is seeking damages from a brokerage firm, he or she should consider arbitration. An investor can decide to both file a complaint and file for arbitration.

The mediation alternative
Not all claims submitted for arbitration are necessarily decided by an arbitrator. Parties may attempt to resolve a dispute through mediation. In the first nine months of 2015, there were 378 mediation filings.

Here's how mediation works:

A party may pursue mediation by filing a request for mediation form with FINRA. If a case is already in arbitration, a party may still request mediation by contacting FINRA. The mediation will move forward as soon as both parties agree to participate. Alternatively, you can go straight to mediation if all parties agree.

The parties then select a mediator from a list provided by FINRA, or may agree to use a mediator that is not included on FINRA's list. The costs of the mediation will include the fees charged by the mediator as well as FINRA mediation filing fees.

For brokerage customers, mediation filing fees range from nothing to $300, while the fees charged by the mediators themselves will vary depending on the mediator. The parties usually agree on how to split responsibility for the mediator's fees. For small claims of $50,000 or less, the program offers free or low cost mediation (depending on the claim amount).

Once a mediator has been selected, a mediation session is scheduled to take place in person, by phone or through a video conference. During the session, which typically lasts about a day, the mediator will meet with both parties together and may also have private meetings with each party.

Unlike arbitrators, mediators do not hand down decisions. Instead, they work with the parties to determine a resolution. If the parties agree to a settlement, that settlement is final. If the parties reach an impasse, the case may be resolved through arbitration.

To learn more about arbitration and mediation, visit FINRA's Arbitration and Mediation page.

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By Alice Gomstyn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.