june 2003

Utilizing Arbitration Instead of Litigation

BACKGROUND

Litigation is often employed as the means to resolve disputes. Interestingly enough, of all litigated cases, approximately 90% are settled. Whether a case is tried to a conclusion or settled before trial, the parties incur significant litigation expenses. Nor does the conclusion of a trial necessarily end litigation expenses since the victorious or defeated party may decide to appeal the decision.

Arbitration enables parties to bypass the courts and avoid a good deal of litigation and appeal expenses.

Arbitration is an informal process in which the parties agree, typically in a contract, to submit a dispute to an impartial third party (an “Arbitrator”). The Arbitrator functions as judge and jury, and will hear the facts, apply the law and issue a decision (an “award”). The award may be binding or nonbinding, depending upon the process selection by the parties. If utilizing binding arbitration, the award is final, enforceable by the court, and can only be appealed on limited grounds. When the process is non-binding, the award is advisory and can only be final if agreed upon by the parties.

ADVANTAGES OF ARBITRATION:

  • It is less expensive than litigation.

  • It is quicker than litigation.

  • It can be private and confidential.

  • It is more flexible than litigation, since:

  • The rules of evidence do not apply.

  • There is no motion practice or formal discovery.

  • The parties select the Arbitrator.

    WE RECOMMEND

    You consider using arbitration in lieu of litigation. In addition, consider the use of arbitration clauses in your contracts as a means of ensuring an efficient and speedy alternative to a protracted lawsuit should a dispute arise.

    If you have any questions concerning Arbitration, please contact John J. Reilly.