By Victor L. Wolf
In the past few decades, arbitration has become an accepted and widely used alternative to traditional litigation.
For businesses, arbitration generally enters into the picture in construction, real estate, commercial or employment contracts where the parties agree ahead of time to seek arbitration instead of litigation should a dispute occur. On other occasions, even when arbitration is not required under contract, parties may contemplate referring an existing legal dispute to binding arbitration instead of going to court.
The involved parties, rather than having their dispute decided by a judge or jury, refer the case to an arbitrator, a neutral third party who hears evidence and renders a decision. Like a judge, the arbitrator hears opening arguments, closing statements and testimony, but it’s usually behind closed doors in a conference room where everyone is sitting down. The arbitrator makes a written decision that is typically binding.
There are a number of potential advantages to drafting contracts that require disputes to be resolved through arbitration rather than litigation: