People may resolve a dispute through litigation, but not all cases have to go to court. Often, arbitration is an effective alternative dispute resolution method that can save time and money.
Arbitration may be voluntary or mandatory, and many companies include it in their contracts to prevent people from taking them to court.
Benefits of arbitration
According to Harvard Law School, arbitration is similar to litigation in that a neutral third party acts as judge, listening to the evidence of all the involved parties and issuing a decision. However, the arbitrator or panel of arbitrators usually includes experts in the topic at hand. A judge may know the law but not understand the nuances of the dispute topic.
Arbitration also provides more room for flexibility than a court case. Rather than waiting on a court docket for their case to come around, parties can set up their case around their own schedules, and they also may negotiate the ground rules rather than adhering to standard court procedure.
Cases that go through the court system become public record, and litigation can have a negative effect. Arbitration remains a private matter, which can mitigate damage to the reputations of those involved in the dispute.
Downsides of arbitration
FindLaw points out that, as with a judge’s decision, an arbitrator’s decision is legally binding. However, appeals are not an option after arbitration, and parties usually enter arbitration with an agreement not to resort to litigation.
The court system has a complex discovery process that allows both sides to conduct a thorough investigation into all sides of the matter before bringing their cases before a judge. In arbitration, the rules for discovery are typically a part of the arbitration agreement, and they may not have enough detail to ensure fairness.
Because arbitration agreements are often part of the fine print, people may not realize they are signing a binding contract that will not allow them to take their case before a judge.