Arbitration Can Help You Recover Money Faster without the Acrimony of Litigation

By Brown, Curtis D. | Business Credit, April 2004 | Go to article overview
Save to active project

Arbitration Can Help You Recover Money Faster without the Acrimony of Litigation


Brown, Curtis D., Business Credit


Commercial credit departments face a dilemma: they need to recover overdue money as quickly and easily ms possible but, in so doing, must be careful to avoid jeopardizing longstanding business relationships. They also have to resolve countless billing disputes and misunderstandings diplomatically, while always remembering that unpaid loans can erode the company's profits.

Most credit managers have an arsenal of tactics for dealing with difficult debtors. To these they should add arbitration--a legal alternative that can gain the same results as litigation without the costs, acrimony or interminable delays. Even a small dispute can takes years to wind its way through the courts, while arbitration can provide a legal decision from which one can obtain a court judgment in a matter of weeks or months. In fact, The American Bar Association Section of Litigation recently found that 78 percent of attorneys surveyed believe arbitration is more timely than litigation, and a majority of those surveyed believe arbitration is more cost effective than litigation.

Arbitration procedures are basically streamlined versions of regular court hearings, with all of the usual legal protections. Typically, parties to a dispute may appear at hearings, present evidence, and call and question each other's witnesses. The hearings may take place in person, by phone or by videoconferencing. There are even "document" arbitrations, which resolve disputes solely on the basis of written statements.

Sometimes arbitration is preceded by an attempt at mediation, in which a neutral mediator tries to help the parties resolve the dispute through facilitated dialogue. However, it's up to the two parties to reach an agreement. The mediator cannot impose a settlement.

If mediation fails, the dispute typically moves on to arbitration. Unlike mediation, an arbitrator or arbitration panel makes an award or decision after the case has been presented, and the decision may be made legally binding by converting it to a court judgment. If an arbitrator mishandles a case or misinterprets the law, parties to the dispute can get redress from the courts, the ultimate arbiters, because all arbitration awards are reviewed by courts in a process called "confirmation." Resolving legal disputes outside of court is not as big a leap as one might imagine. Even cases that are litigated are almost never resolved by a court. Instead they are settled outside of court, which raises the obvious question: Why do companies invest so much time and money in litigation, when the cases never get to court? They can accomplish the same outcome through arbitration or mediation, in much less time and at much less cost.

Typically, credit managers prefer arbitration to litigation because the savings on legal costs can be enormous. Litigating a dispute can take years and consume the credit department's time and the company's profits.

Some critics argue that organizations handling arbitrations may be biased in favor of the party that wrote the agreement, especially if that party always uses the same organization. Again, courts are quick to slap down any perceived unfairness, and there are a number of neutral agencies like the National Arbitration Forum that administer arbitration programs, using impartial rules and regulations that have withstood the test of time.

Before picking a program administrator, a credit manager should ask them how they work and get a copy of their rules. It also makes sense to inquire about costs, impartiality and arbitrator qualifications and to clarify whether die arbitrators will be legal professionals or laypeople. Even though you have a legal dispute, some arbitration providers still use arbitrators who have no legal background. It pays to ask.

The arguments in favor of arbitration are solid. About the only stumbling block left is the actual wording of the arbitration agreement. Drafting an arbitration agreement that stands up in court and gets the job done takes a fair amount of skill.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Arbitration Can Help You Recover Money Faster without the Acrimony of Litigation
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.