Arbitration is becoming increasingly prevalent as a form of dispute resolution and an alternative to courtroom litigation. Parties can agree to utilize arbitration when a dispute arises, or they may have already agreed to arbitration as the means for resolving future disputes when they first entered into a contractual relationship.
Our Chicago arbitration lawyers have successfully tried arbitrations across a wide spectrum of corporate and commercial disputes. See below to learn more about arbitration, and call King & Jones in Chicago at 312-372-4142 to discuss whether arbitration is an appropriate forum to resolve your business dispute.
In arbitration, each party presents its side of the dispute to a neutral third party – the arbitrator. Typically, one arbitrator is assigned to hear the dispute, although in some situations, the parties will present their case to a panel of three arbitrators. Whether one arbitrator or three, the parties generally have control over the selection of the arbitrator(s) through a previously established fair process.
Arbitration in some ways seems similar to a trial in a courtroom. Each side presents evidence to the arbitrator, including documents, exhibits, witnesses and legal arguments as necessary. At the conclusion of both parties’ presentations, the arbitrator makes a ruling, which is binding on both parties. Arbitrations and trials have significant differences, however. For example, arbitrators are not bound by the rules of evidence that control a trial. Arbitrators have more leeway in what kind of evidence to allow and in the scope of the questions they put to a witness, if they desire. The litigation tool known as “discovery” is also generally limited in arbitration. Before an arbitration, the parties do generally exchange witness lists, copies of documents or exhibits they plan to use, and a statement of the issues and their positions regarding the dispute.
In a trial, the facts in the case are usually decided by a jury of laypersons who come from all walks of life. Issues of law are decided by the judge, who is a legal expert but may or may not have practical experience in the matter under dispute. Arbitrators, on the other hand, are frequently active or retired business professionals who have decades of experience working in the industry. Alternatively, the arbitration panel may include lawyers who practice in the area of law under dispute and have acquired specialized knowledge through years of practice.
For the above reasons, arbitration is often well-suited in highly technical litigation, where the dispute involves complex questions outside the realm of the average judge or juror’s experience. For the lawyers presenting the case, it can be easier to prepare and argue technical points to these industry “insiders.” This fact not only makes the ruling more likely to be relevant to the parties’ needs, but it also tends to make arbitration less expensive than a trial, since fewer costs may be involved in deposing expert witnesses and preparing for trial. Balanced against this cost savings is the fee charged by the arbitrator or arbitration panel.
Another positive aspect of arbitration is that the parties can control the process, including choosing the arbitrator who will hear the case and scheduling the arbitration at a convenient time. It can take years to get a trial on a crowded court’s docket, but arbitration can often be scheduled in a matter of months, as soon as the parties are prepared to present their case. Also, trials are public proceedings, and court rulings are a matter of public record. Arbitration, on the other hand, is a private affair. Companies wishing to keep their disputes out of the public eye consider the privacy aspect of arbitration to be a huge positive factor.
Arbitration is usually binding by default unless the parties agree otherwise beforehand. There can be benefits to holding a nonbinding arbitration. Such a proceeding gives the parties a rough guide to how litigation might play out in court. It can enlighten the parties and give them a more realistic perspective regarding the strength of their case or their opponent’s. A nonbinding arbitration, therefore, can be helpful to spur the parties toward productive settlement talks.
Binding arbitration decisions are also notoriously difficult to appeal, so the parties need to be ready to live with the decision. Trials, in contrast, are appealable under a number of different grounds. That said, the business litigation attorneys at King & Jones have vast experience in arbitration, including getting arbitration awards successfully overturned in court.
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