Reasons to Go Through Arbitration Instead of Other Methods of Dispute Resolution

The purpose of a negotiation is to bring two parties together in order to find common ground and seek solutions that are mutually beneficial. While this sounds great in theory, things don’t always go as planned. There might be times when the two parties simply cannot come to an agreement and must seek an alternative dispute resolution or it might even be that one party is contesting the contractual agreement that was initially agreed upon during negotiation. In any case, there are several methods of dispute resolution including mediation, arbitration, and litigation. While there is certainly a time and a place for each of these, they certainly have their advantages and disadvantages so it’s important to know which type of dispute resolution would be most appropriate for your situation. Let’s take a closer look at why arbitration might be the best option when it comes to settling disputes. 


Types of Dispute Resolution

There are essentially four types of dispute resolution: negotiation, mediation, arbitration, and litigation. Negotiation is generally where people begin because it’s an informal consensual process by which two parties try to reach an agreement. In many cases, this is simply a starting point and further dispute resolution is needed. 


Mediation is another type of dispute resolution. Like negotiation, it is also a consensual process, but it involves a neutral third party who helps the parties negotiate a resolution to settle their dispute. In a mediation, it is still the responsibility of the involved parties to come to an agreement. The mediator does not make or impose any decisions on behalf of the parties. 


Arbitration is a more formal process for resolving a dispute. The arbitrator is also a neutral third party, but the process requires formal rules of procedure and the arbitrator typically has legal training. Unlike a mediator, the arbitrator has the authority to make decisions that are binding on both parties. 


Finally, litigation involves settling a dispute in a court of law. It is the most formal and expensive form of dispute resolution and requires both parties to be represented by a lawyer. 


Advantages of Arbitration

Anytime there is a dispute that requires a third party to help resolve it, it is advisable to start with arbitration. Unlike other forms of dispute resolution, arbitration allows both parties to reach a solution without stalling, wasting time, or wasting unnecessary money. Here are just a few of the advantages of settling a dispute through arbitration. 

  • Both parties agree on the arbitrator: Unlike other forms of dispute settlement, an arbitrator is someone who is chosen by both parties so everyone involved can have confidence that they will be fair and impartial. 
  • The dispute will be solved faster: Working with a mediator can involve multiple back and forth meetings and that can take time. Furthermore, a date for arbitration can usually be obtained much faster than a trial date. This means that arbitration can usually be the fastest and most productive way to settle a dispute. 
  • Arbitration leads to results: Unlike mediation where it’s up the parties to reach an agreement, an arbitrator has the authority to make binding decisions. 

Arbitration is less expensive than a trial: It can be extremely expensive to go to trial and the involved parties can save money by not hiring lawyers, expert witnesses, and trial preparation fees.