Generally speaking, businesses want to avoid litigation at all costs. Litigation can be very expensive, time-consuming and can potentially ruin relationships. Fortunately, you can save litigation for a last resort in most cases.
A popular alternative to litigation is arbitration. According to FindLaw, many companies choose arbitration because it may be faster, simpler and potentially more fair than litigation.
What is arbitration?
Arbitration is when both parties select a panel of arbitrators to hear both sides of the case. The arbitrators will then produce a written decision on the case, much like a judge does. Typically, an arbitration panel has three arbitrators. In the majority of cases, each party will select one arbitrator on their own and then they will compromise on the third.
Arbitration is typically legally-binding. In fact, in some cases it can be more difficult to undo the decision of an arbitration panel as compared to a decision in the courtroom.
What are the pros and cons?
Arbitration is typically faster and simpler than litigation. However, this is not always the case. For instance, if the arbitration panel decision is not legally binding, you may end up in court anyway. In terms of the fairness of the process, arbitration allows the parties to select their own arbitrators. However, this can be a disadvantage in certain situations, particularly if an individual who is not familiar with the arbitration process is going up against a corporation who has a lot of experience with it.
Whether arbitration is the right choice for you depends on your particular situation and desired outcome.