The Visionaries – Arbitration versus Litigation

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In my practice, I have tried cases in court as well as in arbitration. I am also an arbitrator and have held numerous hearings as both an individual neutral and as a member of a panel. I have often discussed with other lawyers whether arbitration or litigation is the best method for dispute resolution. My experience and perspective as an advocate and an arbitrator lead me to an inevitable answer: it depends. The prevailing perception of arbitration is that it is faster, cheaper, and more efficient than litigation. This is true, with some caveats.

In my experience as a litigator and an arbitrator, commercial cases take about nine months from initiation to completion, with some complex cases taking even longer. Disputes, whether in court or an arbitral forum, can be financially and sometimes emotionally taxing, and given the time differential between the two methods of dispute resolution, the opportunity to minimise this toll by reducing the length of a case should not be taken for granted.

To proceed with an action in the court system, the parties put themselves at the mercy of the court’s overcrowded calendars. Arbitration, on the other hand, offers much more flexibility. Hearings can usually be scheduled in a manner that is convenient for the parties involved. Further, arbitration’s rules of evidence are also less strict; these procedural rules can limit costly and time-consuming aspects of court cases, such as motion practice and discovery (for example, depositions). Because arbitration is quicker and is a generally less complicated process, legal fees tend to be lower in cases decided in arbitration. Importantly, arbitration hearings can be conducted privately, and decisions are not public, thereby affording confidentiality on top of efficiency.

Arbitrators are also often experts in the subject matter of disputes they preside over. In fact, some arbitration provisions require arbitrators who have such expertise. This process puts the chosen neutral in a unique position to limit costs and time by guiding a more tailored process.

Finally, parties in arbitration have agency in the arbitrator-selection process (whereas there is none in court, where judges are assigned randomly) even when not choosing a subject matter expert. In arbitration, when a case is filed with JAMS or The American Arbitration Association, these prominent arbitral organisations usually provide a pool of potential arbitrators specific to the case. After that, parties begin the striking process, in which both sides can remove candidates that they see as problematic. Further, this allows (at least in theory) the parties to settle on an arbitrator most likely to leave them comfortable with the ultimate factfinder and decision-maker.

Read more in our brand-new publication, The Visionaries