Advantages of Business Arbitration

Advantages of Business Arbitration

Advantages of Business Arbitration

For some businesses the advantages of business arbitration will outweigh the disadvantages. Many business contracts contain arbitration clauses – but the question is, whether business arbitration is the right choice for your business contracts over court litigation. The right answer will depend on the facts and circumstances of your business. A business lawyer can help you analyze the pros and cons and determine the best path for you. Here are some factors to consider:

Business Arbitration Advantages:

  • Business Arbitration may be able to achieve a faster resolution over litigation – however multiple parties and an aggressive litigation strategy from opposing parties may make the process longer.
  • Business Arbitration generally costs less overall than litigation – however the initial filing fees for arbitration are certainly higher than court filing fees in most cases. The cost savings come from the relative informality of the arbitration proceeding and a faster schedule for completing the case.
  • Formal court rules for the exclusion of evidence do not apply in Arbitration. Generally, unless the parties agree otherwise, everything can be presented as long as its relevant.
  • A main advantage of business arbitration is that it is a private proceeding there is no public record, unlike in court where ever document is made part of the public record unless special steps are taken to seal documents.
  • The Arbitrator is bound by confidentiality and cannot disclose the details of the proceedings. Further, each party, plus the experts and the attorneys can also be subject to confidentiality obligations by agreement.
  • Arbitration, especially if the arbitrator is carefully chosen can minimize the risk of a bad decision that is the result of arbitrary or disinterested jury – but a bench trial in court could accomplish the same goal.
  • Unlike court where judges are appointed to your case, in business arbitration you have the ability to choose your arbitrator, review their background, check their references and ensure that they are knowledgeable about the subject matter of your case and have a reputation for fairness.
  • In business arbitration all discovery (including depositions, document requests, interrogatories) are limited in scope and are controlled by agreement between the parties, in court the federal or state rules apply.
  • Arbitration can either be binding or non-binding on the agreement of the parties. If it is binding arbitration the arbitration award is final and there is no right of appeal.
  • The date of the arbitration hearing is generally set by agreement between the parties and the arbitrator and is not subject to the court calendar.
  • Arbitration can be particularly useful in international disputes where the local laws of each party may be in conflict. It allows the parties to decide the ground rules to resolve their dispute including location, language to be used and other factors.

Bottom Line for Advantages of Business Arbitration

These are just some of the advantages of business arbitration. Businesses considering using arbitration clauses in employment contracts, commercial contracts or other transactions should consult with their legal advisor to determine whether the advantages of business arbitration outweigh the disadvantages.

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