Corporate disputes have successfully been resolved by arbitration for decades because it is an effective way to resolve disputes economically, efficiently and with justice. Historically, arbitration has been used as an alternative to litigation in the United States and worldwide. In comparison to arbitration, litigation can be very expensive and time consuming. Some arbitration critics argue that the costs of arbitration are creeping up and that there are longer time periods to achieve final resolution of some corporate arbitration disputes. The costs, however, do not have to be high and arbitration disputes can be resolved far more efficiently than litigation.

This article provides six key suggestions regarding how to make your corporate arbitration process more economical and efficient.

Draft a sound arbitration clause

An arbitration case can be delayed if it does not address certain elements of the process such as timeframes, amount of arbitrators, etc. This can result in an unnecessary waste of time and money for the parties that can easily be avoided. There are crucial items that should be in all arbitration clauses such as amount of arbitrators, locale, disputes to be arbitrated, discovery limitations and applicable law.

The parties control the process

The parties need to remember that the arbitration process is theirs. Unlike when they go into court and face a judge or jury, when it comes to arbitration the parties can control the arbitration process. This includes the arbitration procedures, selection of the decision maker (i.e., the arbitrator), amount of hearings, and timeframes – all of which contribute to the time and cost of the arbitration. The parties can disagree about the facts of their dispute but they should not disagree on how their arbitration case will be managed. The role of the arbitrator is to facilitate and help manage the process for the parties, a process that the parties can control through mutual agreement. The parties, therefore, must express their expectations to the arbitrator at the outset of the process. A better understanding of this fundamental component of arbitration by all interested parties, including the arbitrator, will help rein in overall costs.

Jul-Sep 2014 issue

American Arbitration Association