Arbitration is often a preferred alternative to litigation of large complex commercial cases. Many studies have shown that arbitration offers procedures that are more economical and efficient than court proceedings. For example, a recent survey conducted by the American Arbitration Association (AAA), the largest provider of alternative dispute resolution (ADR) services, found that in large complex cases that ended in an award on the merits, the period for discovery was less than nine months in more than 85 percent of the cases. (As reported by 417 arbitrators (involving 366 cases) after serving on commercial, construction and individually negotiated employment cases awarded in 2013 that had a claim or counterclaim of at least $500,000.) This is significant because the bulk of litigation costs are incurred during the discovery phase.

In addition to the time and cost advantages, arbitration enhances the prospects of reaching the ‘correct’ outcome. Court systems throughout the US are overburdened, and judges have less time and staff to devote to the management and analysis of complex cases. Lay juries may not have the education or experience necessary to understand corporate disputes. Arbitrators, on the other hand, are often selected by the parties from a pool of professionals with knowledge of the relevant industry and training in the management of commercial disputes.

Jan-Mar 2015 issue

Murphy & King