In response to the exploding cost of litigation, arbitration has come into vogue over the past few decades, especially for business disputes. Organizations such as the American Arbitration Association cater to these needs, and many other options are available as well. Arbitration works well for some, but not all, disputes. It is important to understand the pros and cons of arbitration.

Why It Might Be a Good Idea to Arbitrate Your Dispute

A few of the best reasons to arbitrate:

  • Time-consuming and costly discovery procedures can be largely avoided or simplified. This can prevent a wealthier party from simply exhausting the other party through endless discovery requests, and it can reduce the time investment by both parties.

  • Arbitration is generally quicker than litigation. A general rule of thumb is that an arbitration case takes about three to six months to resolve.

  • The parties can select an arbitrator with specialized expertise in the subject matter of the dispute – construction law, for example. The ability to select a courtroom judge is far more limited.

  • The parties can agree to keep arbitration proceedings private, while lawsuits are generally open to the public.

Why It Might Be a Bad Idea to Arbitrate Your Dispute

A few of the best reasons not to arbitrate:

  • Arbitration organizations charge far more than courts do for administrative fees, and arbitrators charge quite a bit as well. Depending on the circumstances, the money you save in discovery compliance expenses might be more than offset by administration and arbitrator’s fees.

  • The arbitration tribunal has no authority to drag a third party into the proceedings without their consent. Some types of cases, such as construction disputes, may require the consent of multiple parties before arbitration can be commenced.

  • You cannot appeal an adverse decision except under extremely limited conditions (arbitrator fraud, for example). Of course, some parties consider this a benefit to arbitration, not a liability.

  • Enforcement of an arbitral award is more cumbersome and time-consuming than enforcement of a lawsuit judgment. Even when you cannot appeal an arbitration award to a court, you can still apply to a court to enforce an arbitration award – it just takes longer to get results if the losing party is stubborn.

There are two occasions when you may agree to arbitrate: when signing a business contract (if the contract includes an arbitration clause) and after a dispute breaks out. The first option offers certainty, while the second option offers flexibility. Either way, the pros and cons of arbitration should be carefully weighed.

Experienced Representation is Critically Important

Even if arbitration turns out to be an effective alternative to litigation for your particular dispute, it is not a viable alternative to legal representation. The earlier in the dispute you seek the services of an experienced business law firm, the better your prospects will be.

CKB Vienna’s track record of success in court and in arbitration has been built through successful representation of SMEs as well as Fortune 500 companies. We serve clients throughout Upland, Fontana, Ontario, Chino Hills, Claremont,Rancho Cucamonga, including Alta Loma and Etiwanda. Call us at 909-980-1040 or contact us online to learn how we can best assist you.

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