Understanding arbitration

[540ceea2]

Hi everyone,

Thank you sincerely for dedicating your time to review my case. I would greatly appreciate your assistance and insights on this matter.

After completing successfully four projects with a different freelancer, I am currently experiencing a nightmare with the current one.

Some background:
I was actively seeking a professional freelancer or agency to manage my ongoing project. Before commencing the freelancer's tasks, I ensured the completion of a nondisclosure agreement (NDA) and a customized contract. This thorough contract outlines the scope of work, the mutually agreed-upon compensation, and the scheduled delivery date. Furthermore, a provision within the contract specifies that any delay in delivery beyond the agreed timeframe will incur a monetary penalty of $50 per day.

The freelancer fell short of completing 10% of the project within the agreed-upon time. Furthermore, they sought approval for the initial milestones, attributing it to the necessity of compensating their employees. In the event of non-approval, they communicated their intention to delay the project until securing funds from an alternative client. Despite these circumstances, I acquiesced to their request for assistance. However, after two months, minimal progress was evident, prompting me to terminate the freelancer and initiate a dispute.

The freelancer implored for another opportunity, proposing a $500 penalty fee. Despite reservations, I decided to grant them a final chance and opened an additional project for them.

The freelancer committed to completing the work within a month. However, a month later, the freelancer reiterated their financial constraints, and once again, I agreed to release payment.

Now, two months after my leniency, I find myself compelled to conclude that the situation is untenable. Unable to tolerate further delays, I opted to initiate a new dispute and demand a refund.

The arbitration questions:

1. Arbitration Authority and Freelance Fees: Can the arbitration entity exercise the authority to collect the freelance fees amounting to $50 for each day of delay, as specified in the contract both parties signed?
   
   
   
2. Refund Authority: Does the arbitration possess the jurisdiction to issue a full refund for the entirety of the funds I have previously transferred to the freelancer?
   
   In the event of a successful arbitration process, will the freelancer be held responsible for covering my arbitration fees?
   
   

Enforcing Payment from Freelancer: What mechanisms does the arbitration employ to compel the freelancer to disburse the owed funds to me?

I am keen on understanding the process and authority through which the arbitration can demand payment from the freelancer and ensure a fair resolution.

thanks in advance,

Shay

[wlyonsatl]

As a non-lawyer, it is my understanding neither Upwork nor the arbitrator will have the authority to force the freelancer to pay the full amount you are eventually awarded if you “win” arbitration. 

If you agree to go to arbitration and pay Upwork your half of the arbitration fee and the freelancer does not, you will “win” your dispute under Upwork's rules. Upwork will pay out to you an amount equal only to what's in the project's escrow. If you booth agree to arbitration, the arbitrator's decision may or may not equal the amount in dispute. 

If you and the freelancer both agree to pay the arbitration fee and comply with the arbitrator’s requests for information, the arbitrator’s goal will be to come to a “fair” resolution, which may not take into consideration all laws that might apply if a judge and jury were involved via a lawsuit. Neither you nor the freelancer have to have an attorney involved in arbitration, but there is no rule against it. 

To enforce an arbittator’s decision you’d also have to have a court of law confirm the arbitrator's decision, which also means neither you nor the freelancer can subsequently file a formal lawsuit about the same dispute. The arbitrator’s decision is the end of the line and any enforcement takes that decision - and only that decision - into account.

Enforcing an arbitrator’s decision is a whole other ball of wax. If you and the freelancer live in different states, much less different countries, the cost of enforcement of the arbitrator's decision may not be worth it compared to the arbitrator’s decision on who owes whom what amount of money.

You should no doubt seek advice from a qualified legal professional to understand all of your options, obligations and expectations to determine if the effort is worth the potential reward.

Good luck!