Arbitration as an alternative to courtroom litigation in these uncertain times
Even while the courts are closed due to the COVID-19 pandemic, it’s still possible for parties to have their business disputes decided by way of arbitration.
What is arbitration?
Arbitration is an effective alternative to courtroom litigation. And, importantly, the decision of an arbitrator is legally binding and enforceable, as if it were made by a judge.
Many business contracts contain an arbitration or dispute resolution clause, which provides that if a dispute between the parties arises, they must resolve it through arbitration. However, parties can also choose arbitration after a dispute has arisen, even if they have no arbitration clause in their contract, and even if they are already involved in a lawsuit in the courts.
Arbitration is ideal when the parties want:
- a private proceeding for reputational or business confidentiality reasons;
- a flexible process tailored to the dispute at issue;
- speed; and
- finality in cases in which no appeal is permitted.
Benefits of arbitration
An arbitration can often proceed much more quickly than a lawsuit because it provides active case management by the arbitrator, and scheduling can be done based only upon the availability of the arbitrator, the parties, and their counsel.
While a lawsuit must proceed using courtroom rules that are “one size fits all”, an arbitrator can customize the procedure to the dispute to make it faster and more efficient.
Also, the parties may agree that the decision of the arbitrator is final, which eliminates the delay and uncertainty of an appeal in the courts.
More importantly, and of particular relevance in the current legal landscape (if appropriate for the dispute), an arbitration can be done in a way that adheres to the current “social distancing” requirements
- motions or case conferences with the arbitrator can be done by way of video or teleconference;
- legal submissions can be done in writing or by videoconference;
- witness testimony can be taken remotely;
- an arbitration can be done entirely in writing, with evidence going in by way of written affidavit or sworn written statement rather than via witness oral testimony; and
- since most parties would like an opportunity to discuss settlement of their dispute with an expert dispute resolution professional before the final hearing, mediators are now making themselves available to conduct mediations via videoconferencing.
Why choose arbitration now?
Most businesses view litigation in the courts as an unfortunate, costly distraction from which they would like to move beyond as soon as possible:
- it consumes the time of their directors, officers, and employees which would otherwise be devoted to business operations;
- it takes a long time from beginning to end, usually years; and
- it can strain relations between parties in an ongoing relationship who want to get back to business quickly.
Particularly in these days of great uncertainty – when no one knows when the courts will open and when it will be business as usual again, arbitration can address all of these concerns and put disputes behind parties quickly so that they can continue to focus on their business.
focus on their business.