Authors: Attorney John C. Mitby & Law Clerk Sarah E. Schuchardt
Arbitration or court – which is better? Before deciding, it is best to determine what the problem is and if there are time constraints. Furthermore, if there is a contract that provides for the method of dispute resolution, then the contract may control.
Arbitration has a lot of pros: it is efficient, offers finality, allows for creative solutions, may keep costs down, and is confidential. However, arbitration does have some drawbacks. The issue is heard before an arbitrator, who may not explain the reasoning behind the final decision. There is also no right to discovery in arbitration, which means that you may not know what the other side will offer as evidence. Furthermore, arbitration is not confined to the same strict rules of evidence as a court, which could be either a pro or a con. Although the cost could be less than going to court, it also has the potential to be greater. Arbitration decisions are also difficult to appeal, even if the arbitrator made a clear error.
Court also offers many benefits: there is a strict legal process, the court explains the reasoning behind its decision, each side is allowed to conduct discovery, and the result is appealable. However, litigation often takes a long period of time, with many costs. These drawbacks may be tolerable if you would prefer to have the issue heard before a jury instead of being decided by one person. If you did little or nothing wrong or have strong legal defenses, then court may be better than arbitration. Furthermore, going to court also offers the option of reaching a settlement before trial.
One important consideration is whether there are multiple parties. It would be inconsistent and potentially disastrous if some of the parties are in arbitration and the others are in court. Make sure that all of the parties are using the same dispute resolution method in order to avoid inconsistent results.
If you are debating whether arbitration or trial is the right avenue to resolve your dispute, ask your attorney for guidance and perform a risk analysis.