If you have a legal dispute with another person, do you arbitrate or litigate?
The advantages of arbitration versus litigation are that arbitration is generally quicker, less formal, and less expensive than litigation.
The disadvantages of arbitration versus litigation are the following:
- Waiver of the right to trial before a judge or jury.
- Requirement to pay the individual arbitrator’s fees, plus the fee of any arbitration company such as the American Arbitration Association.
- Lack of full discovery proceedings such as depositions and production of documents and other evidence from the opposing party.
- No right to appeal in the event of an arbitrator’s wrongful (and sometimes absurd) decision.
The “bottom line” in my opinion is that arbitration is advantageous with “small” disputes, while litigation is advantageous with larger disputes.
Note: The boilerplate language in many contracts of large companies such as homebuilders provides for mandatory arbitration. The consumer is usually required to “take it or leave it” as arbitration with the waiver of a right to a jury trial is deemed to be advantageous to large companies.