An independent consumer arbitration panel is being set up by the D.C. City Council to help consumers who purchase vehicles and other goods and services that prove to be defective.

The Board of Consumer Claims Arbitration, whose members have not yet been confirmed by the City Council, is expected to provide a speedier and less costly alternative to the courts for resolving consumer disputes.

"The panel has the potential to be more expeditious than civil litigation might be," said Fred Goldberg, a Washington attorney who has been nominated by D.C. Mayor Marion Barry to serve on the seven-member consumer board.

"The process is supposed to take no longer than 60 days by law, and court cases could take up to two years," he said.

The consumer panel, which was part of a controversial "lemon law" passed by the D.C. City Council in December to provide protection for consumers when they buy defective cars, will be set up under the D.C. Office of Consumer and Regulatory Affairs.

To collect an automobile-related refund or get a replacement under the new D.C. law, consumers must go through the arbitration process. The decision of the arbitration group is not binding on either party.

District auto dealers generally have opposed the arbitration panel, arguing that it is unnecessary.

"Most auto manufacturers have their own dispute settlement mechnanisms, which comply with the federal Magnuson-Moss Warranty Act," said William H. Crabtree, general counsel of the Motor Vehicle Manufacturers Association.

"We think these have been very successful," he said.

Crabree said that Chrysler Corp. and Ford Motor Co. have their own arbitration programs, while General Motors and several other auto companies use the Better Business Bureau for their arbitration.

The Federal Trade Commision agreed to settle complaints about GM engines and transmissions when the company agreed to have the Better Business Bureau mediate disputes.

But supporters of the new panel argue that mechanisms for resolving disputes established by the major auto manufacturers and the Autocap arbitration program operated by the National Automobile Dealers Association and its local affiliate do not work effectively to resolve consumer complaints.

"Autocap is like having the foxes watch the chickens," said Ann Brown, chairperson of the Consumer Affairs Committee of Greater Washington Americans for Democratic Action and also a nominee to the panel.

The budget for the city-operated arbitration panel is $70,000 a year, according to Henry C. Lee III, a special assistant in the D.C. Office of Consumer and Regulatory Affairs who has been nominated to serve on the new panel.

Lee expects that budget to increase because Mayor Barry wants to broaden the scope of the consumer board.

Barry has proposed changes in the District's no-fault insurance bill that, if passed, would include arbitration of auto claim disputes by the consumer arbitration panel.

The D.C. City Council is scheduled to vote on confirming the seven panel members at its Tuesday legislative session, according to a staffer in the office of council member John Ray (D-At-Large).

Ray introduced the law that called for the panel.

When the panel members are confirmed, the D.C. Office of Consumer and Regulatory Affairs will draw up regulations about how the arbitration board will work.

The other panel members nominated by Barry along with Brown, Lee and Goldberg, are:

Edith Barksdale Sloan, a former member of the U.S. Consumer Product Safety Commission from 1978-83; Frederick P. Allen, president of the Washington Federal Printing Workers Union, Local 713; Edward L. Feggans, owner of Ed Feggans Limosine Service, and Sharman J. Monroe, an attorney in private practice.