By: Steven G. Kaplan and Patrick Bowers
Disputes
happen all the time. Most disputes are minor
and resolved between parties without involving a third party. But where parties cannot resolve their
disputes--and because we live in an alleged civilized society in which we
strongly discourage private resolution of conflict by means labeled
“anti-social” (e.g., dueling)—a third party is called in to assist in resolving
the dispute. You pay your taxes
(probably) so why not get your money’s worth and take your dispute to court. If dueling is frowned upon, what’s left other
than rushing to court? Let’s consider binding
arbitration.
Arbitration
pro: Speedier resolution, however, this is
not always the case due to numerous parties, arbitrators, lawyers, and
litigation strategies.
Litigation
pro: There is a large body of
substantive law and procedure which automatically organizes the lawsuit and the
parties don’t have to create the rules that will govern the dispute.
Arbitration
pro: Less costly, however, this might
not always be the case due to numerous parties, arbitrators, lawyers, and
litigation strategies.
Litigation
pro: The judge, by law, must be
impartial and the judge’s salary does not depend upon whether the parties ever
use that particular judge in a future matter.
The judge is not personally affected by the outcome of the dispute.
Arbitration
pro: Exclusionary rules of evidence
don’t apply. Everything can be admitted into
evidence so long as relevant and non-cumulative.
Litigation
pro: Trial takes place in the courthouse
and therefore neutral territory.
Arbitration
pro: Not a public hearing. There is no public record of the
proceedings.
Litigation
pro: If a litigant is unhappy with the
court’s decision an appeal might be possible.
Arbitration
pro: From a defense point of view, there
is reduced risk of punitive damages and run away juries.
Once
the parties choose binding arbitration over litigation, either in the contract
or after the dispute arises, they must then choose an arbitration body, the most
prominent being JAMS and the American Arbitration Association (AAA).
Yippee! You won an award in binding arbitration. Well, don’t pop the champagne cork just
yet. With JAMS, even if you win an
award, it will not give you your award until you pay the arbitrator fees. So you have racked up quite the tab for
arbitrator fees. No problem; I can pay
with part of my award, right? Nope. You must pay the arbitrator fees with money
apart from the award.
On
the other hand, AAA will release your award without full payment of the
arbitrator fees. That way you can pay
the arbitrator fees with part of your award, pop the champagne cork, and move
on with your life. Cheers!
