When Commercial Arbitration Makes the Most Sense

Compared with litigation, there are major advantages to using arbitration for the resolution of commercial disputes. In fact, the practice has become so popular and appreciated that many contracts are being written with arbitration provisions so that parties know what to expect in the event of a dispute.

One of the biggest advantages for using arbitration is in reducing the amount of time it takes to finish a dispute. According to data from the American Arbitration Association, the median length of time for a commercial case dispute to be resolved was just shy of 8 months, whereas the median length of time from filing to completion of a litigated dispute was over 33 months. If you want to maximize your time, arbitration can help you do that while still achieving a just resolution.

Another benefit is enhanced party control. While in litigation you can select your attorney who will help prepare your case to the best of his or her ability, beyond that, you have very little say or control in how things unfold or what the final decision looks like. Arbitration changes that because it’s related to contracts itself – parties can design the structure of arbitration so that it best suits them.

Of course, that flexibility is another hallmark of arbitration. Deadlines and hearings in arbitration can be set up based on the objectives of the case and the convenience of the involved parties. In fact, putting certain clauses into the agreement setting the terms for arbitration to begin with can make the process as efficient as possible. These might include limitations on the amount of time to conclude discovery and other aspects of the proceeding including the award. Preparing in this way really makes the most of everyone’s time and money.

Finally, many commercial enterprises prefer the veil of privacy while working through what they consider to be private disputes. Arbitration hearings are held privately and are only attended by the involved parties and their counsel. This limits the number of individuals who learn sensitive facts and gives parties more comfort in the ultimate outcome of the case overall. When used in commercial disputes to save time, money and frustration, arbitration can be a highly effective tool of alternative dispute resolution. Parties walk away with a binding decision and the appreciation of being able to resolve their case in private, adding an element of confidence for everyone involved.