Arbitration is a legal term for the resolution of disputes outside the courts. For the resolution to take place through arbitration there must be an agreement between two or more parties to have the dispute resolved by an arbitrator. An arbitrator is generally a well-qualified, impartial attorney who reviews the evidence, hears testimony, and acts as the judge and jury by rendering an opinion based on the facts.
Arbitration can be extremely beneficial for the following reasons:
- Arbitration can be much cheaper than litigation in court. Litigation in court generally lasts for several days, weeks, or even months. This can be a long process, because each party is required to bring in several witnesses. Expert witnesses can be extremely expensive to bring into court. An arbitration is less formal than a jury trial. This allows the parties to use expert reports instead of live testimony from a witness. In some cases this can save the parties several thousands of dollars in litigation expenses.
- Arbitration is typically shorter than a jury trial. Since arbitrators generally have a vast amount of expertise in the area of law at issue, it is not necessary to explain everything in detail as you would a jury. Parties to the lawsuits are required to be at the trials and arbitrations. Since arbitrations can be much faster than a trial, you will not have to miss as much work or be away from your responsibilities.
- Unlike trials, arbitration proceedings and arbitral awards can be private. Once a case has been tried in the court system, it becomes public record, including the documents and allegations. If the parties agree ahead of time, arbitration awards can remain confidential and private.
- Unlike judges, arbitrators can be chosen. The parties to an arbitration can choose a single common arbitrator. When parties cannot agree on a common arbitrator, a panel will be used. Each party will choose one arbitrator and then the two arbitrators will agree on a third.
- Arbitration decisions are generally binding and final. There are limited avenues for appeal from arbitration awards. Because of the expense and time associated with appellate litigations, arbitration can be extremely economic and beneficial to ensure your case is not appealed and retried to a jury.
Numerous courts have adopted a strong policy in favor of arbitration and other types of alternative dispute resolutions for the reasons listed above. When faced with a legal matter that cannot be resolved short of litigation, consider the benefits of arbitration; it may be in your best interest.