Question

Explain why many organizations require arbitration instead of litigation.

(300 words)

Answer 1

Arbitration is an proceeding in which two parties present competing evidence and arguments before a third party who then decides the dispute much like a judge would in a trial. An arbitrator can be a judge or attorney or non-attorney expert, depending on the subject matter of the conflict. Usually, the parties agree on the arbitrator beforehand. Whereas Litigation is a very old process that involves determining issues through a court, with a judge or jury.

Litigation is a formal process conducted in a public courtroom, while the arbitration process is private, between the two parties and informal.

As Litigation is a formal process, it is an expensive, frustrating and generally inefficient way to resolve disputes. Costs for litigation include attorney fees and court costs, which can be very high. The costs for the arbitration process are limited to the fee of the arbitrator and attorney fees.

The arbitration process is fairly quick. Once an arbitrator is selected, the case can be heard immediately. But in litigation must wait until the court has time to hear it; this can mean many months, even years before the case is heard.

Arbitration can be voluntary, judicially mandated or contractual; and the outcome of an arbitration can be either binding or nonbinding. In binding arbitration, the parties agree in advance that the arbitrator´s decision or monetary award will be final. It is a substitute for a court proceeding and cannot be reviewed or overturned, except under very limited circumstances. In nonbinding arbitration, the arbitrator´s decision is not final, but rather intended to help guide the parties toward settlement of their dispute.

That´s why alternative mediation is becoming an increasingly popular means of resolving lawsuits before trial and even avoiding litigation altogether. It minimize the expense and delay associated with litigation.