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Should you arbitrate a business dispute?

On Behalf of | May 9, 2019 | Business Litigation |

Disputes between business partners can tear a Florida company apart, which is why many businesses build ways to resolve conflicts into their contracts. Some companies employ mediation or civil litigation, but arbitration is commonly used to handle many disputes. Arbitration mimics a civil trial in that the disputing parties make their case before a person who looks at the evidence and renders a judgment. Arbitration, like any form of resolution, has its benefits and drawbacks which should be carefully considered before going forward with it.

Per, companies typically like to use arbitration because it costs less than civil litigation, takes less time, and is more private. Going to arbitration means that details about the case that could be embarrassing if made public will be kept confidential in the arbitration process. Also, sometimes corporate or technical matters may be so detailed and sophisticated that the company prefers a specialist to arbitrate as opposed to a judge who might not be familiar with the concepts involved.

Some people do have a problem with arbitrators since there is almost no possibility of appealing an arbitrator’s decision. Arbitrators often have greater latitude than even a judge in a civil trial to make decisions, and when the choice is made, it is often final. It may take an incredible lapse in judgment on the part of the arbitrator to void the decision, such as a criminal act or incompetence. An arbitrator may even be biased against one party, although careful screening may prevent a prejudiced individual from being chosen to arbitrate. 

Arbitration, like a civil trial, is still an adversarial forum, and it could intensify the conflict between the disputing parties. One side is likely to lose, with almost no chance of coming out of the dispute with anything. However, arbitration is useful if a conflict requires facts to be determined or a clarification of the law. While some conflicts can be solved by a less adversarial process like mediation, a dispute that needs a definitive judgment is often better served by arbitration.

Some companies build arbitration into their contracts to ensure that conflicts will not find their way into court and yet will still be resolved in a timely manner. Because business disputes take many different forms, you should only read this article for general information and not for legal counsel of any kind.