Companies Elect Arbitration over Litigation

By Haydock, Roger S. | Business Credit, October 1992 | Go to article overview

Companies Elect Arbitration over Litigation


Haydock, Roger S., Business Credit


Time, cost, and privacy are among the top reasons companies choose arbitration over litigation, according to a recent survey by Equilaw International.

To determine business attitudes towards arbitration, Equilaw surveyed a random sample of 1,250 companies and more than 50 percent responded. Among the findings:

* Eighty-eight percent of respondents agreed: "Arbitration takes less time than litigation to resolve a dispute." The average length of an Equilaw arbitration beginning with the service of a claim through the issuance of the award is a few months, compared to four years for a civil litigation case. Reasons for the substantial time difference are that litigation involves discovery procedures, continuances and delays, crowded court dockets, protracted jury trials, and long appeals.

* Eighty-five percent of responding companies felt: "Arbitration procedures save money, including attorneys' fees and litigation expenses." Arbitration fees are generally less than litigation costs. In the Equilaw system, the party initiating the arbitration pays a filing fee proportionate to the value of the claim. This is the only fee required for a document hearing. While a participatory hearing requires a predetermined cost, no deposition expenses, attorneys' fees for discovery and motion, or appeal costs are involved.

Companies See Arbitrators As Impartial

* Eighty-three percent of responding companies believed: "The arbitrator is neutral and impartial." Arbitrators have an excellent reputation for fairness and objectivity. Equilaw arbitrators have a minimum of ten years of practice or professional experience. They have outstanding reputations and are appointed to individual cases based upon their expertise related to the factual and legal issues to be decided.

* Eighty-five percent of responding companies agreed: "Arbitration proceedings are confidential and private and not open to public exposure." Unlike litigation and judicial proceedings, the arbitration files and the hearings are privy only to the parties involved.

* Ninety percent of the responding companies felt "Arbitration proceedings are less formal than litigation and do not involve as many rules, legal technicalities, or complex proceedings." Arbitration is generally easy to understand. Equilaw's National Arbitration Forum Code of Procedures is written in simple language clear to a lay person. Parties can submit any relevant and reliable evidence to an Equilaw arbitrator for consideration.

Arbitration Leads to Enforceable Awards

* Eighty-five percent of responding parties agreed: "Binding arbitration results in a final award that is enforceable." An arbitration award confirmed to a judgment is as enforceable as any judgment issued by a court. The Federal Arbitration Act, the arbitration acts of each of the 50 states, and international arbitration treaties and laws allow for an arbitration award to be confirmed to a judgment. …

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