We often get asked whether arbitration as an alternative forum for dispute resolution is worth it and our standard answer is: Each matter is unique and it depends on the circumstances.
Firstly, what is arbitration?
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
What are some of the PROS?
Flexibility – Through provisions set forth in an agreement or upon mutual agreement of the parties once arbitration has commenced, the parties have the opportunity to establish rules and limits for pre-hearing exchange of documents or interrogation of witnesses, the manner in which an arbitration hearing will be conducted and the level of detail to be included in an arbitration award.
Time – Arbitration typically provides a speedier resolution than proceedings in court.
Private – Arbitration proceedings are generally held in private.
Forum Location – the parties can agree to hold the arbitration in a certain location regardless of where the cause of action took place.
Arbitrator Selection – where disputes involve highly technical and complex matters, an arbitrator specializing in such areas is a great benefit in complex cases.
What are some of the CONS?
Cost – There is a common misconception that arbitration is more cost effective than the standard court ligation route, however, this as a general rule is not the case in practice.
No Appeal – typically arbitration awards are final and binding and not appealable.
Antagonism – Arbitration proceedings can easily be frustrated by one or more of the parties leading to time delays and increased costs.
Joinder of Parties – Parties may be compelled to participate in arbitration proceedings only by agreement. Thus, if any additional parties are necessary for complete relief, those other parties either must have agreements requiring such participation or otherwise must consent to their joinder in the proceedings. In contrast, in court proceedings, all persons and entities involved in a dispute typically can be joined as parties (whether they consent or not).
Whatever your choice, we are here to advise you and help guide you in making this all important decision!
