International Arbitration V Litigation: Is ADR Really Better?
How many times have we heard the old cliches about arbitration being faster, cheaper and preferable to litigation? Well, that may be true in some situations, but often a party may be better off with litigation. Making that determination depends on multiple factors. This article will address seven of them.
1. Speed – Surveys observe a growing perception that arbitration is no faster, no cheaper and less reliable than litigation. In theory, there are many methods to speed up arbitration, such as using just one arbitrator, instead of three; restricting discovery, witnesses and submissions; submitting the case on the pleadings; and so forth. However, parties may feel such limitations hinder their ability to fairly present their case and receive a correct decision. consequently, such methods may be less appropriate for more costly or complicate disputes.
2. Cost – Resolving a US$10 million argument in the International Court of Arbitration, using three arbitrators, will cost $397,367 in administrative costs and arbitrator fees; a US$5 million argument with one arbitrator will cost $132,349; but those figures dont include fees for attorneys and experts. As with speed, the parties may reduce cost by limiting evidence, procedures and number of arbitrators; but, again, any savings must be weighed against the possibility of compromised justice.
3. Consent – It seems likely the parties will be more pleased with arbitration if they agree to arbitrate after the argument has arisen, instead of beforehand, because at the time of argument their decision is more knowing and consensual. However, one disadvantage of arbitration is the possible without of consent over applicable third parties. Unlike litigation, such third parties cannot be forced into the proceedings, leaving the possibility in some situations that arbitration may not completely and finally resolve the argument.
4. Confidentiality – Although litigants can often assistance from court confidentiality orders, one of the dominant benefits of arbitration is its greater confidentiality, since there are no public hearings or filings.
5. Experience of Decision – Makers It is often claimed that arbitration allows the parties to select more experienced decision-makers, such as persons skilled in a particular technology. However, in a less technical case thats less of an advantage. additionally, the legal and procedural skills and experience of judges should not be discounted.
6. Right to allurement – The finality of arbitration is often touted as a assistance. Usually, the parties agree the award will be final, binding and non-appealable, which contributes to its cost-saving reputation. However, the drawback is without of recourse if the decision-maker errs, which is clearly a definite possibility.
7. Enforceability of Award – With respect to enforceability, arbitration is usually viewed more favorably than litigation, because 145 nations (but not Taiwan) are signatories to the New York Convention, an agreement by which the signatories basically agreed to permit the enforcement of foreign arbitral awards as if they were local court judgments. Enforcement of foreign court judgments, however, can be troublesome.
So, whats the conclusion? Which is better? Should you include an arbitration provision in your next contract? Im afraid youll have to make that determination on your own, as the best decision will depend on the particular facts of each case.