Arbitration – What You Need to Know

What is Arbitration?

Arbitration is a mechanism that helps resolve disputes outside of the courtroom. An arbitrator is a third party who has access to documents and hears oral arguments by both sides of the case. Each side can (and often is) represented by legal counsel. After such arguments are presented to the arbitrator, they are able to render a binding decision. For some litigants, arbitration is a powerful and effective tool. However, parties who favor a decision rendered by a jury or judge would oppose arbitration.


The Disadvantages

  • Arbitration is a binding mechanism. Even if an arbitration seems wrong or unjust, once a decision made, there is little room for an appeal. When it comes to arbitration, the decision is in the hands of a small third party (either one person or a small panel). This leaves room for more impartiality compared to a larger jury decision.
  • The “discovery process” is when information is gathered. This is a crucial step for building a case, seeing all sides, and coming to a fair solution. In normal litigation, this discovery process is quite extensive: depositions of witnesses, interrogations, and a plethora of document exchanges. Without this comprehensive discovery process, there is a chance that facts and evidence can be compromised. Thus, choosing arbitration can significantly affect the outcome of a case.
  • Arbitrators are not lawyers. They are not required to follow the law nor abide by any specific guidelines. An arbitrator comes to a decision based on equity, not law.
  • Arbitration is not a public affair and is conducted behind closed doors. If an arbitrator is not held publicly responsible, is their decision more vulnerable to bias? Many would argue that the lack of transparency and court review can promote a bias.

Arbitration is a quick and private way to solve disputes without going through the court system. However, depending on your case it might not be the best course of action. As listed above, arbitration has its limitations. With the help of an attorney, you can help decide if a binding arbitration is the right choice for your case.


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