What Is Arbitration?

Arbitration is an alternative means of resolving legal disputes. Instead of going through the court, parties who agree to arbitration have their cases heard before a neutral party known as an arbiter (alternatively “arbitrator” or “arbitratal tribunal”).

Why Is Arbitration So Popular?

Arbitration is popular because it is often cheaper than litigation before a court. Many times, arbitration proceedings have less formalities than traditional court proceedings. For instance, discovery is often much shorter and much less comprehensive. Additionally, arbitration proceeds much faster than traditional litigation, again cutting costs.

What Are The Drawbacks of Arbitration?

The drawbacks depend on which side of the arbitration you are on. For example, a large corporation who has caused an enormous number of customers a very small amount of harm could benefit from arbitration by avoiding a possible class action. Simultaneously, however, having entered into a contract which stipulates binding arbitration might be a drawback for members of the potential class of customers.

So Is Arbitration Good Or Bad?

As is the answer to most questions in law, it depends. In the example above, an arbitration clause could be good for the corporation and bad for the consumer. However, this is not necessarily the case. Class action lawsuits often arise because no single member of the class has a large enough claim to be worth pursuing in court. A criticism of class action lawsuits is that they purportedly benefit the lawyers who handle them more than they do the class. Thus, a person who resolves a dispute via arbitration may end up with more money in damages than they might have been awarded from a class action. Similarly, if the number of customers who initiate arbitration proceedings is very large, the amount the corporation ends up spending could be more than it would have had there been a class action.

Got An Arbitration Question?

Attorney Chris Mutchler may be able to help. Get in touch with The Law Office of Christopher J. Mutchler. If we can’t help you, we’re more than happy point you in the direction of someone who can!

Christopher J. Mutchler, Esq.

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