It is very common for business contracts to contain an arbitration clause. Hoping to avoid the potential expense of trial, companies large and small often insert language into their contracts that requires both sides to take any future disputes over the agreement to arbitration instead of filing a lawsuit.
If you have never been through arbitration before, it would help if you at least have a general idea of how it works. Here is a brief overview.
What is arbitration?
Arbitration is a form of alternative dispute resolution like mediation. It can take many forms, depending on the rules laid out in the contract, but it is one of the most formal versions of ADR. In fact, it can resemble a trial, without many of the rules and formalities of a civil court lawsuit. And instead of a judge, arbitration is presided over by an arbiter or panel of arbiters.
Instead of being assigned by the court, the parties often have a say in who the arbiter or arbiters will be. For example, it’s common for the contract to allow the parties to select from a pool of arbiters or eliminate choices from a list of possible arbiters. The choices can be experts in the particular area in dispute, such as breach of contract or employment law, which obviously would help them rule fairly and according to the law.
At the arbitration itself, each side has the chance to present evidence, call and question witnesses and make arguments — close to how a trial works, but in a simplified and more limited form. The overall process is typically faster than a lawsuit, saving both sides time and money in legal fees.
Arbitration representation can be helpful
Whether you choose arbitration to resolve your business dispute, or you are contractually obligated to use it, you can retain an attorney to help you prepare and represent you at the hearing.