Answer to Question #99978 in American Law for T'Lissa Dudley

Question

What are some of the advantages that U.S. firms gain by agreeing to resolve disputes through arbitration? What rights do they give up as a result?

Answer 1

Advantages of Solving Disputes through Arbitration to US Firms

1.   Avoidance of hostility – Arbitration encourages full participation of the involved parties which results in the peaceful resolution of conflicts rather than creating hostility between the two parties

2.   Cheaper than Litigation – litigation involved experienced lawyers who ask for huge pays for them to represent the firm. However, arbitration does not involve layers and court proceedings that are both time consuming and costly.

3.   Flexibility – Arbitration resolutions can be scheduled at any time fit the involved parties, unlike the court proceedings that must comply with court calendars.   

What they give up because of Arbitration

1.   Objectivity – The process used in choosing an arbitrator might be biased leading to biased resolutions

2.   Lack of Transparency – Since the process is privately conducted as opposed to litigation that is conducted in public, there are questions of transparency resulting to biased conclusions that benefit particular individuals instead of the firm