Arbitration: know what you are choosing

Arbitration is often recommended as being less costly, time-consuming and more certain than a civil trial, however, that may not always be the case. Arbitration can be useful if you fully understand the risks, but in some cases, it’s advantages can be outweighed by the consequences of some of its features. One issue to consider is the complexity of the transaction. If the contract or agreement has many moving parts susceptible to breakage, such an agreement may not be suitable for the arbitral forum. The danger with an arbitration is that unless the parties agree and the contract spells out a contrary procedure, a single arbitrator can decide your case and that decision will likely come unadorned with facts or reasoning.

It is also, for practical purposes, unreviewable by any court in Minnesota. While businesses have found the finality of an arbitrator’s decision to be reassuring, the situation can become more problematic if the arbitrator rules against your position. If you are unhappy with the result, there is no appeal.

The arbitrator’s decision is final. It does not matter if you or your attorneys suspect it was based on non-precedential arguments, sloppy reasoning or was made in outright error. This is one of the weaknesses of the arbitral system.

Because there are almost never any written findings of fact or law and no opinion that details the arbiter’s reasoning, the system is perhaps more prone to error than the court’s, where judges decisions are public record and subjected to multiple levels of review.

While it may add some time to the resolution of some issues, traditional litigation has the advantage that there is a clear record and there may exist the option of an appeal for your dispute. When choosing, you should thoroughly discuss the merits of each method of dispute resolution for you matter with your attorney.