PROCEED AT YOUR OWN RISK: DRAWBACKS OF USING ARBITRATION PROVISIONS
If there is any doubt that use of arbitration provisions by businesses is ubiquitous, one need only consider the number of organisations that exist around the world that administer arbitrations. Some of the more commonly known include the American Arbitration Association (AAA) , the International Chamber of Commerce (ICC), International Institute for Conflict Prevention & Resolution (CPR) and JAMS. Despite arbitration’s prevalence, businesses should not automatically include an arbitration provision in every contract without considering whether the complexity of a deal may mitigate against a dispute resolution provision that calls for arbitration. This article highlights some of the often overlooked problems associated with using arbitration to resolve complex business disputes.
One of the purported advantages of arbitration is the speedy resolution of disputes. However, when a complex business dispute is submitted to arbitration, the resolution is not necessarily speedy. As is often the case, complex commercial arbitration typically permits the parties to engage in discovery. When the amount at issue is millions of dollars, the parties desire to develop their claims and defences using traditional discovery tools such as depositions, written requests for the production of documents, expert reports and third-party subpoenas. Because discovery takes time, arbitrations that allow for discovery often are not any more speedy than a traditional court proceeding.
Apr-Jun 2017 issue
Buchanan Ingersoll & Rooney PC