In my more than 40 years as a trial lawyer, I have seen arbitration go from being vilified because it divested the courts of jurisdiction over civil disputes to becoming the preferred form of dispute resolution in many commercial situations.
For those who are unfamiliar with arbitration, it is simply another method for resolving disputes. An arbitration proceeding arises from a contract between two or more persons or entities to submit their dispute to a panel of one or more arbitrators. The scope of the disputes that can be adjudicated by arbitration is usually covered by the arbitration agreement.
Arbitration is a private proceeding, unlike a public lawsuit filed in court. Some parties specifically choose the arbitration forum for that reason - they do not want legal proceedings affecting their affairs to become public. There are both federal and state statutes that provide some governance of arbitration proceedings.
Ask trial lawyers about their experience with arbitration and you will get mixed reactions. Some lawyers like it because if it is conducted as originally intended, it is efficient, expedient and economical to a greater degree than litigation. Other trial lawyers will tell you they hate arbitration. Usually, that is a result of grafting all the characteristics of traditional litigation -written discovery, multiple depositions and numerous motion hearings of all sorts - on the arbitration proceeding.
One matter distinguishes arbitration from litigation and that is there can be no appeal from the final award, except in the limited cases of fraud, bias or active wrongdoing that affects the outcome of the proceeding.
In my business, litigation and civil trial practice, I like arbitration for the reason it was conceived - efficiency, expediency and economy, with a heavy emphasis on economy. Litigation is very expensive, and generally beyond the financial ability of the middle-income taxpayer. Even for those who can afford litigation, there are many disputes where the amount at issue cannot justify the fees associated with full-blown litigation.
Therefore, before preparing or signing a contract, consider whether or not you want to include provisions on arbitration as a means of settling potential disputes.
Miami attorney Harry A. Payton holds dual Florida Bar board certifications in Business Litigation and Civil Trial. He is the founder of Payton & Associates, which serves domestic and international clients, including businesses and high-net-worth individuals, in complex litigation matters.