While many people are familiar with the litigation system in our country, not everyone can say the same regarding arbitration. You might have heard that arbitration is cheaper, faster, and more tailored to your personal needs, but what does it really mean to settle a case through arbitration and why is different from litigating a case in state or federal court?
First, let’s start at the very foundation. Arbitration is an alternative dispute resolution (ADR) where two parties choose an arbitrator, or in some cases three or more depending on the complexity of the case, to resolve their dispute. An arbitrator is usually an attorney or former judge who is not only a neutral party, but has a relevant expertise in that precise legal field. He or she will hear the case and make a final decision, which is usually binding and enforceable by the courts.
There is already an important distinction between litigation and arbitration: The parties choose their arbitrator, instead of going to court and having no control over who will preside the judicial proceeding. In addition, the jury might struggle with a very complex legal matter, but this problem does not occur during arbitration since the arbitrator is the only person who is hearing and deciding the case.
After describing a little bit the process of arbitration, you should not be surprised to hear that it is usually faster and cheaper than litigation. As an additional help to expedite the process and save money, arbitration hearings can usually commence within 60 to 90 days; on the other hand, states with the largest caseloads, including New York and California, might not offer a trial date until 9 months from the date of filing.
Privacy is another substantial advantage that arbitration has over litigation. In fact, the parties can keep their dispute and final award completely confidential, something that cannot be done in a regular courtroom setting.
So why aren’t all cases are resolved through arbitration? An important downside is that if an arbitration is binding, a party has no or very limited right to appeal depending on the jurisdiction, even if the arbitrator makes a mistake of fact or law. Another major disadvantage goes back to the previous point about rules of evidence and discovery: Quicker does not always mean better. The arbitrator might consider evidence that would not have been permitted in court or limited discovery could prevent disclosure of important information or documents.
Arbitration can be a very powerful solution that can save you time, money, and headaches. However, a careful consideration about the nature of your case is indispensable before makingsuch a determination. If you are not sure on which dispute resolution best fits your case, our experienced attorneys will be able to assist you.