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Is Arbitration the Best Way to Resolve Your Business Dispute?

Business Dispute Lawyer

Arbitration is the process of bringing a business dispute before a disinterested third party for resolution. The third-party, an arbitrator, hears the evidence brought by both sides and makes a decision. Sometimes that decision is binding on the parties. To arbitrate a matter is to bring it before an arbitrator. Typically, arbitration begins when two parties agree to settle their dispute through arbitration. An addition arbitration clause could also add this agreement to a contract that both parties have signed. As a sort of alternative dispute resolution, arbitration is always used in place of litigation to settle a dispute without the cost and time of going to court. There are three main types of alternative dispute resolutions: litigation, arbitration, and mediation. Compared with mediation and litigation, arbitration has many advantages to help you better resolve your business dispute.

One of the most confusing questions for many people is the difference between arbitration and mediation. In fact, they are two different ways to solve legal disputes. Mediation is a method of resolving misunderstandings. In a dispute, a third-party mediator is brought in to help both parties reach a settlement agreement to resolve their potential or present disputes. In many cases, the mediator does not have the authority to make a binding decision. The process of mediation is sometimes used in place of litigation, but more often it’s used to resolve disputes before they get to the point of litigation or arbitration as a precedent alternative resolution for disputes. Compared with the arbitration, the goal of mediation is to resolve misunderstandings, while the goal of arbitration is to come to a decision for a dispute. Arbitration is a hearing process in which parties bring the disputes to the arbitrator for a final decision. Mediation is a negotiation process in which a trained mediator works to bring the parties to an agreement. In mediation, there could be either potential or existing disputes. In arbitration, there is usually a formal complaint in process. The most critical distinction between arbitration and mediation is that the mediator has no power to force the parties to come to a decision, but the results of arbitration have legal-binding effects upon both parties. When negotiating a contract, you should carefully weigh the balance of every aspect like costs, efficiency, and legal certainty. Keep in mind that although mediation is cheaper and more flexible than arbitration or litigation, it should not be your final weapon of dispute solution since it has no legal-binding effects to protect your interests.

In the past few years, arbitration has become more and more common in the business world. Court litigation involves specific Rules of Evidence and Procedure, requiring both parties to follow detailed rules composed of Statutory and case law precedent. A complex discovery process may waste you substantial time and expense. However, unlike litigation, court hearings, or trials, arbitration could save your time and costs for your business. First, generally speaking, arbitration is cheaper than litigation. Although arbitration is becoming more costly these days for the extra expenses for both parties hiring lawyers, resolving a case by arbitration is still much cheaper than proceeding through litigation due to its simple rules and the quick procedure. Many businesses also have an arbitration clause in their model contracts, including provisions that deny signers the right to pursue class-action lawsuits, another huge saving for businesses and employers. Second, arbitration is faster and more flexible than litigation. The average time in America today for the adjudication of a dispute by litigation is between 13 to 20 months. Compared with litigation, the discovery procedures of arbitration are very limited, which saves the parties a substantial amount of time. Compared with litigations and trials which has strict control of calendar, arbitration hearings can be scheduled based on the needs and availabilities of parties involved, including weekends and evenings. Third, the simplified rules of evidence and procedure make arbitration an easier game for non-specialists. The arbitrators are not bound by formal requirements of evidence or civil procedure. For example, there is no discovery procedure in the arbitration that involves taking and answering interrogatories, depositions, and requests to produce documents. These procedures are sometimes considered as a game-playing tactic of litigation which may waste lots of times in producing paperwork. It would be best if you also remembered that judged decisions are subject to appeal, while arbitration decisions generally have no right of appeal. Therefore, you should make a thorough consideration of your situation with a business dispute lawyer in Arlington, TX, and expectation when drafting the contract clauses.

Thanks to Brandy Austin Law Firm, PLLC for their insight into business law and resolving business disputes. 

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