It’s entirely up to you. You can agree to binding arbitration or not. It might be a personal contract for medical services or for the purchase or sale of a house. It might be a business transaction where you are the executive with signing authority for your company. Do you agree to binding arbitration? Do you give up the right to litigate any dispute that may arise later regarding the contract? How do you decide? Are there advantages to binding arbitration? Are there disadvantages to litigating, to using the court system to resolve disputes? Well, yes, there are advantages and disadvantages in both systems.
Some businesses routinely require the parties with whom they contract to agree to binding arbitration. They figure that they will be advantaged by arbitration if there is a fight. They don’t want a jury trial. They don’t want a judge who might be overturned by an appeal. They want the streamlined system of arbitration with an all powerful arbitrator to decide the case as judge and jury with no oversight by an appellate court. They are willing to pay for the arbitrator’s time. Courts charge filing fees and impose some other charges but you do not have to pay for the time of the judge as you do for an arbitrator.
Particularly when representing claimants, I prefer litigation. I believe that my client has more power, more advantage with the right to a jury trial and when the judge is subject to the oversight of appellate courts. Arbitrators have far more power than judges. As a practical matter, arbitrators’ decisions cannot be reversed on appeal for errors in managing the case. Arbitrators’ decisions can only be overturned for the most outrageous behavior such as for taking bribes for throwing a case. This immunity from oversight, combined with the fact that an arbitrator makes the jury’s decisions as well as the judge’s, just concentrates too much power in one person for my liking.
In making the decision, perhaps one consideration should be whether you believe you or your company is more likely to be a claimant or a defendant should a dispute take place. It may be that the reason some enterprises require their contracting partners to sign arbitration agreements is because they believe they will have the advantage should a claim be made against them. Just for starters, a claimant might be inhibited from going forward by the burden of paying for the arbitrator’s time. The judge is free, sort of. Perhaps the enterprise requiring the arbitration agreement thinks that it is also an advantage, in defending claims, that the arbitrator’s power is not moderated by a jury or by appellate review of the arbitrator’s decisions.
Sometimes, you will be presented with a binding arbitration agreement and the choice is to sign the agreement or forgo the contract altogether – take it or leave it. In such cases, if the service is important and valuable to you, you will likely sign the agreement without much analysis of the advantages and disadvantages between arbitration and litigation. In other situations, where closing the agreement is not absolutely conditional on acquiescing to arbitration, perhaps you should consider whether you or your company would more likely be a claimant or a defendant, should a dispute occur. Claimants might be better off with juries and judges and appellate review. It is sometimes just the possibility of a jury trial and the possibility of appellate review that gives a plaintiff sufficient advantage to settle a dispute on very acceptable terms. On the other hand, if you believe that you or your company would more likely be defending a claim, perhaps the advantage is in agreeing to binding arbitration.
Consider your decisions. Get good legal advice. Proceed with confidence.
Content prepared by Edmond McGill. © Edmond McGill, 2017
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