Arbitration is becoming an increasingly popular form of dispute resolution, with many contracts now including an arbitration clause. This clause states that any disputes arising from the contract will be submitted to binding arbitration. There are several advantages to using arbitration, such as lower costs and faster resolution times, but there are also some disadvantages that parties should be aware of before agreeing to an arbitration agreement. A contract lawyer who is familiar with arbitration agreements can help ensure that the clause is fair and protects the interests of all parties.
They can also help to ensure that the contract gives the parties rights such as choosing the arbitrator and hiring an attorney to represent them in the arbitration. The cost savings of arbitration are one of its main advantages. Fortune 1000 surveys have revealed that more than eighty percent of companies resorted to arbitration in the past three years, with two-thirds citing lower costs as a reason for doing so. The federal government has estimated that arbitration saves 90 hours of lawyers' time, worth tens of thousands of dollars, each time it is used.
Another advantage of arbitration is that it can provide a faster resolution than going through the court system. This is because there is no need for a lengthy trial process and appeals process, and the parties can agree on a timeline for the resolution. However, there are some disadvantages to using arbitration. One is that many arbitrations are not recorded or transcribed, making it difficult for a party to challenge or nullify an arbitration resolution.
Another disadvantage is that parties who agree to arbitrate disputes are waiving certain important legal rights, such as the right to a jury trial and the right to appeal a decision. Overall, arbitration can be a cost-effective and efficient way to resolve disputes, but it is important for parties to understand both the advantages and disadvantages before agreeing to an arbitration agreement.