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Business Litigation: Arbitration or a Superior Court Trial?

In business litigation, or trust or real estate litigation, the decision whether to Arbitrate a case, or instead try the case in Superior Court, is one of the most critical decisions that a party can make.  In this series of Blog articles I will discuss some of the factors involved in making this decision, and the advantages and disadvantages of Arbitration versus an ordinary Trial.

Arbitration is essentially a process in which the parties litigate their case before a professional arbitrator rather than a Superior Court judge or jury.  The Arbitrator is usually a retired judge, or he or she may be an experienced lawyer with arbitration training.  In some specialized arbitration forums (FINRA arbitration is an example) the arbitrator may be neither.  Some forums provide for more than one arbitrator.  Some key points in arbitration include:

  • There is almost no appeal from the arbitrator's ruling.  This can be good; the parties achieve finality with the ruling.  This can be bad: if the arbitrator makes a bad ruling (and they sometimes do) there is usually nothing much that can be done.
  • Arbitration is expensive.  Arbitrators charge by the hour.  Motions and other processes which would entail only modest costs in Superior or Federal Court may cost thousands of dollars in arbitrator fees.  The arbitration hearing itself will cost thousands.
  • No jury.  The arbitrator sits as judge and jury, the trier of fact and law.  There are many pros and cons to this.
  • Other factors -- arbitration rules may (or may not) limit discovery and provide for arbitration in a much shorter time after the case is filed than might be the case in court.  This can be a big advantage to arbitration.

Parties do not always have a choice whether to arbitrate their case.  If the lawsuit derives from a contract, and the contract provides for arbitration, normally either side can compel arbitration even if one side wants to disregard the clause and file in court.  Even if an arbitration clause seems objectively unfair to one side the Federal Arbitration Act is such that normally arbitration is inescapable.  Thus, entering into a contract with an arbitration clause is an important decision that should not be made without careful thought.  You may wish to review our article Common Pitfalls of Contracts.

Buffington Law Firm's experienced business litigation attorneys have achieved success in many arbitration cases.  If you have a litigation matter that you would like to discuss, call us for a free legal consultation.

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