Dispute Resolution Strategies: Litigation & Arbitration
Both litigation and arbitration are effective dispute resolution strategies that serve important – and somewhat similar – roles in our communities. However, they are not the same. This post will review some – but not all – of the differences between litigating and arbitrating a dispute.
Agreements to arbitrate
One of the most significant differences between litigation and arbitration is that neither party needs the other’s permission to resolve a dispute through litigation. However, a party cannot force another party to arbitrate, unless the parties have signed an agreement that includes an arbitration provision.
The terms and specific language used in the arbitration provision are central to determining whether one party can force another party to arbitrate a dispute. The general rule is that, even if the parties have agreed to arbitrate, if they have not agreed to arbitrate the specific issue in dispute, arbitration may not be compelled, and litigation may ensue.
Selecting the Decisionmaker
If the parties have an agreement to arbitrate and the dispute is one that falls within the scope of an arbitration provision, one of the first things the parties will want to do is select an arbitrator (or multiple arbitrators, depending on the terms of the agreement). The ability of the parties to select the person(s) who will decide how the dispute will be resolved can be a persuasive factor in choosing to agree to arbitration.
In litigation, judges and juries are the ultimate decisionmakers in disputes that are not resolved through settlement. When a lawsuit is filed, however, other than selecting the venue (e.g., location) for the filing, the parties do not have much control over who the judge will be. This may be important if the parties would prefer a judge who has particular expertise, knowledge, or education in the subject matter of the lawsuit.
Through an agreement to arbitrate, the parties can specify whether one or more arbitrators are deemed appropriate for a potential dispute and agree upon the kind of background and experience the parties desire a potential arbitrator to have.
Timing for Arbitration
Trial judges oversee and manage many cases at the same time which can delay when the lawsuit is tried. In many courts, a lawsuit can stay on a trial court’s docket for a year or more before the first trial setting is reached.
Private arbitrators typically manage fewer cases and have more flexible schedules. It is not uncommon for arbitrators to consult with the parties’ counsel to find a mutually agreeable date for a final hearing, within a reasonable period of time.
Having a say – that is, some control – over the timing of a final hearing may be especially important to parties in the wake of COVID-19’s impact on court dockets. Before 2020, it was generally accepted that parties could expect a first trial setting about one- to one-and-a-half years after the lawsuit was filed. In early 2021, the Chief Justice of the Texas Supreme Court indicated that civil lawsuits are not immune from the COVID-induced delays impacting many trial courts’ dockets.
Confidentiality
Confidentiality is often one of the primary considerations weighed by parties in their decisions to arbitrate or not. Unlike a lawsuit and trial, the filings made and hearings conducted in an arbitration are not matters of public record.
Cost
Cost is an important difference between litigating and arbitrating and is sometimes a reason parties resist arbitrating. Unlike in litigation, where the judge and jurors are compensated through public funds, parties to an arbitration proceeding are responsible for paying the arbitrator’s (or arbitrators’) fees (which may be based on an hourly rate) and, when an arbitral tribunal, like the American Arbitration Association, handles administrative tasks in the proceeding, administrative fees are also paid by the parties.
Felicia Harris Hoss
is an attorney-mediator, arbitrator, and early dispute resolution (EDR) neutral, with more than 20 years of legal experience. Through the years, Felicia has helped parties resolve disputes both inside and outside of the courtroom in a wide range of industries involving a broad spectrum of claims. Felicia is available to assist parties and their counsel through online, hybrid, and in-person mediations, arbitrations, and EDR processes.
