Whether you are drafting a contract and wish to include a provision for dispute-resolution, or whether you are currently debating how to dispute a conflict, you must decide which dispute resolution process best fits the situation. 

Litigation, taking the matter before a judge, can be both slow and expensive. Mediation is usually faster, cheaper, and allows both parties to come to a mutually acceptable agreement through a neutral party. But what happens if both sides cannot come to an agreement, yet you still do not want to take issue to court? Luckily, a third process called “arbitration” exists. 

So, what is arbitration? Like mediation, arbitration involves a neutral third party, an arbitrator or group of arbitrators, that like a judge applies the laws to the facts of the dispute to bring the conflict to a resolution. However, unlike, mediation, that resolution is not the result of mutual agreement and compromise by the two parties, rather, it is through the verdict of the arbitrator.  

Why choose arbitration?  Unlike a court case, the proceedings are private, which can be advantageous if the involved parties do not wish to make the nature or existence of a dispute public. Arbitration is usually faster and cheaper than litigation. It has simplified rules and proceedings and offers a more flexible schedule than crowded court calendars. The arbitration process can be pursued domestically or internationally. It is often the favored method of resolution in international disputes if one party does not trust a foreign court system. However, because the arbitrator must hear the arguments and evidence of both sides, arbitration can still be lengthy and costly. The factors affecting the decision to pursue arbitration over other methods of resolution are best considered on a case-by-case basis and is a decision best made with the counsel of an experienced legal professional.  

There are two types of arbitration: binding and nonbinding. In a binding arbitration process, both groups agree beforehand that the decision is final and enforceable by a court, with only narrow methods to appeal. In a nonbinding process, the arbitrator’s decision is simply advisory and only becomes final if accepted by both parties.  

Here at Sumsion Business Law, we stand ready to assist you in all your arbitration needs. Whether you are drafting a dispute resolution provision or currently seeking arbitration assistance, contact our experienced legal team today!   

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Sources:  

https://www.americanbar.org/groups/dispute_resolution/resources/DisputeResolutionProcesses/arbitration/  

https://www.dol.gov/agencies/ofccp/faqs/arbitration  

https://www.siac.org.sg/71-resources/frequently-asked-questions/174-what-is-the-difference-between-arbitration-and-mediation#:~:text=In%20an%20arbitration%2C%20the%20arbitrator,dispute%20and%20makes%20a%20decision.&text=In%20a%20mediation%2C%20the%20mediator,arrive%20at%20an%20agreed%20solution.  

https://www.americanbar.org/groups/business_law/publications/blt/2015/12/07_veasey/  

https://www.nolo.com/legal-encyclopedia/arbitration-pros-cons-29807.html  

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