Arbitration – Out of the Frying Pan and Into the Fryer

Last week we talked about mediation and its usefulness as a dispute resolution process.  If mediation did not work (or you just bypassed this process totally), the next step is to go to court or, in the alternative, agree to arbitration.  In my view, this is like stepping out of the frying pan and into the fryer.  Depending on which process is chosen, the cost increases and the results may not be what you want.  For this week’s post, we will discuss why arbitration may be a useful dispute resolution process to consider.

Arbitration is an alternative dispute resolution process that handles a matter outside the courts with an arbitrator (or arbitration panel).  The parties typically agree to this type of process at the execution of an agreement to resolve any disputes.  Below are some advantages and disadvantages of agreeing to arbitration versus going to court:

Advantages

• Arbitration allows the parties to choose their own rules and arbitrator;
• Arbitration can often be faster than using the courts;
• Arbitration awards are typically confidential; and
• Arbitration awards typically have very limited ways to appeal.

Disadvantages:

• If the parties agree that arbitration is mandatory and binding, they waive their rights to access the courts;
• Depending on the rules, the ability to conduct discovery may be more limited in arbitration or entirely non-existent;
• Arbitration decisions typically have limited ways to appeal; and
• In order to enforce an arbitration award, a party must still resort to the court system if the other party does not comply.

Next week, we will review going to court as an option.

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

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