CIL - Arbitration (Lesson)

Introduction

In an earlier Resolving Legal Disputes module, we took a look at various forms of alternatives to litigation. In most civil cases, dispute resolution through arbitration is one of the most preferred methods by businesses and industries. Arbitration is most preferred due to the many advantages of the arbitration process. Some of the major industries that use arbitration to resolve legal disputes include: medical malpractice, contract law, labor issues, environmental law, and securities and commodities trade.

Arbitration

Arbitration can take place through the court system known as judicial arbitration or outside of the courts through commercial or private arbitration. The Federal Arbitration Act provides for the enforcement of a decision made through arbitration. Most arbitration is conducted according to the rules established by the American Arbitration Association (AAA). The majority of local, state, and federal courts will uphold decisions determined through arbitration processes.

The process of arbitration provides a number of benefits to companies, individuals, and other parties involved in a legal dispute. 

COSTS

Costs associated with handling a dispute through arbitration are considerably lower than the costs of a civil litigation.

TIME

The time involved in the arbitration process is much less than the time that occurs in a judicial process.

DISCOVERY PERIOD

There is a much shorter discovery period in arbitration compared to a judicial process.

DECISIONS

There is greater promptness in making decisions.

SELECTION OF ARBITRATOR

Both parties can select an arbitrator with specific knowledge, experience, and insight into the issue being addressed.

CONFIDENTIALITY

• The arbitration process is private and confidential.
  Decisions made by an arbitrator can remain sealed from the public.

Final Thoughts

Many businesses rely on alternatives to litigation, specifically arbitration, in settling legal disputes. Businesses and individual parties agree to arbitration in contracts. Most arbitration terms are held as binding, meaning that the arbitrator’s decision is final. As individuals, many of our day to day business dealings most likely include some sort of an arbitration clause, such as in the contract for a new credit card or maybe the contract for a new car purchase. It is important that as citizens and consumers we understand our legal rights and the options available to us.

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