Should I arbitrate or litigate?

On Behalf of | Jul 29, 2020 | Business Law |

Depending on the exact nature of your business dispute, litigation may not be the best choice. In some circumstances, arbitration may be better.

Which one is better for you depends on your particular situation. According to FindLaw, things to consider when thinking about arbitration or litigation include cost, fairness and finality.

What are the benefits of arbitration?

Generally speaking, arbitration is cheaper, even though this is not always true. This is because talking out your problems with the other party may eliminate the need for a lot of legal maneuvering.

In terms of fairness, usually both parties will meet to agree on who is going to arbitrate the case and what exactly the process will entail. This means that nobody controls the arbitration process in full, and the entities can tailor terms to the specific situation.

It is also notable that the outcome of arbitration is usually binding. This means that, either way, the dispute will be over. This also applies even if the arbitrating party has made errors.

What are the benefits of litigation?

Again, while arbitration is generally cheaper this is not true all of the time. Arbitration can be extremely complex and if the parties decide to go for a non-binding arbitration, the issue may still end up going to court anyway. This will make the process more expensive.

Particularly in a situation where an individual is trying to settle with a corporation through arbitration, the corporation may have the upper hand because it is likely the corporation has gone through arbitration before. This can affect fairness negatively.

Finally, the finality of arbitration can be a negative. Again, even if the arbitrator made a glaring mistake, this can be very difficult to rectify.