Do you want to avoid the hassles of a court trial when resolving a dispute?
Arbitration is a type of dispute resolution thatand#39;s as financially exhausting and demeaning as a court battle. It also offers a faster resolution.
Businesses these days prefer this method and include an arbitration clause in their contracts, whether itand#39;s for a client, a business partner, or even an employee. Arbitration location and arbitrators are usually part of the clause.
There will be no pointing fingers and no fault-finding. Arbitration gives both parties an equal opportunity to present an oral argument. Arbitration can also use online meetings as a venue.
However, the arbitration process has its drawbacks as well.
Read on and learn the advantages and disadvantages of using this dispute resolution process.
Benefits of Arbitration
Most businesses today prefer using arbitration when resolving their contractual disputes. Some of the benefits youand#39;ll get when choosing this method are as follows:
- Both parties agree on the arbitrator. Arbitrators are pre-selected by both parties before the parties start. The trust that both sides place on an arbitrator can help add more impartiality and guarantee fairness throughout the process.
- Faster resolution compared to normal litigation. Itand#39;s faster to obtain the date of arbitration compared to a court date. The arbitration process doesnand#39;t have the restrictions of normal litigation like court venue.
- Arbitration is usually less expensive. Compared to paying expert witnesses, arbitrator fees are a lot less. Furthermore, both parties will usually have to equally split the expenses of paying an arbitrator. Also, the cost of paperwork and other filing fees are lower than the expenses involved in a trial. Since youand#39;re not restricted to hold the arbitration in court only, you can cut down on travel and lodging expenses during the entire process.
- Arbitration never goes public. This dispute resolution is a private procedure. Both parties donand#39;t have to worry about any part of the process going public. The resolution is kept confidential, and any resolution is only known to both parties and the arbitrator.
- Resolution on arbitration is binding. Although the process is not held in an actual court venue, the resolution of arbitration is always binding. There are almost no opportunities to make an appeal since both parties agreed upon the decision before itand#39;s made final.
Drawbacks of Arbitration
While arbitration has excellent benefits, It also some disadvantages that you need to be aware of:
- No right to an appeal. Since the arbitration award is final and binding, both sides have a slim chance to make an appeal. If there are any errors in the final decision, thereand#39;s almost no means of correcting it.
- The monetary award has limitations. If the issue being resolved is complicated, itand#39;s usually better to go with regular trial proceedings. The amount of expenses youand#39;ll incur may be higher than the maximum amount an arbitration award can give, which is limited to $15,000 only. Litigation settlement, on the other hand, has no limitations.
- More open rules of evidence. Arbitration is not as restrictive as a court trial. An arbitrator may accept pieces of evidence that a judge or jury wouldnand#39;t usually accept. For example, if some information from a witness comes with documents that give backing, cross-examining the testimony is almost impossible.
- Discovery is not as extensive. In arbitration, the opposing party may not be strictly required to provide certain information or documents. Discovery is limited, so decisions may be easily skewed.
- Mandatory arbitration may cause unfairness. If arbitration is required to be able to sign a contract, the other party doesnand#39;t have the flexibility to choose an arbitrator. As a result, an arbitrator may end up not being impartial if one of the parties is a regular client.
- Arbitrators are not entirely within the bounds of the law. The flexibility that comes with an arbitration process can also be a reason to move beyond a lawand#39;s scope. Some arbitrators may use andquot;apparent fairnessandquot; instead of strictly adhering to the law. This may result in an unfair outcome which defeats the purpose of arbitration in the first place.
Arbitration Offers a Different Approach
Since arbitration is less expensive and time-consuming when it comes to simple contract disputes, most businesses make this mandatory in their contracts. However, having a good arbitrator, like Judge Shira a. Scheindlin, is always essential to ensure a fair and impartial process.