Arbitration

Arbitration can be a cost-effective way of resolving a business dispute. But only with a proper strategy and goals that are well-defined at the outset.

Overview

Many commercial contracts require that disputes be submitted to mandatory arbitration, rather than litigating in a public court. Although the parties’ contract can vary the rules by which an arbitration is conducted, they generally share the following common characteristics:

  • The decision of the arbitrator(s) is binding. Unlike litigation in court, there is no opportunity for appeal.
  • Courts will overturn an arbitration decision under very limited circumstances. The Federal Arbitration Act, as well as state arbitration law, generally give great deference to decisions made by arbitrators.
  • The proceedings are private and confidential.
  • The parties either agree upon an arbitrator (or multiple arbitrators), or the administrator (for example, the American Arbitration Association) chooses them. Arbitrators can be former judges, practicing lawyers, and even non-lawyers.
  • The parties split the cost of compensating the arbitrator(s).

Some arbitrations are just as involved as litigation, with lengthy discovery proceedings. Others are much more streamlined. Most of them involve an evidentiary hearing akin to a trial.

Because the arbitration process can often be tailored much more so than in the case of litigation, a thorough strategy is key to an effective arbitration proceeding. Issues such as the necessity of obtaining information from third-parties, and the cost of paying the arbitrators must be considered.

Even if there is no contract requiring arbitration, businesses can always agree to arbitrate after a dispute arises.

ASG Law has experience in a variety of arbitrations and can help businesses develop and implement a proper strategy to resolve their dispute.