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Is arbitration always best for resolving business disputes?

On Behalf of | Apr 6, 2018 | Contract Disputes |

You have an implacable problem with a business partner that has become detrimental to your company’s operations. It is optimal to resolve that dispute via arbitration rather than through formal litigation, right?


Maybe not.

As a recent article in the New York Law Journal notes, “Whether a dispute should be litigated or arbitrated is not a simple question and the answer is not black and white.”

Many people mistakenly believe it is, as evidenced by what the Journal piece points to as “an almost knee-jerk” propensity of many business principals negotiating contracts to include an arbitration clause in business agreements to address disputes and their resolution.

The reasons often advanced that allegedly underlie arbitration’s go-to status when things go contractually wrong are several and recurrently expressed. Arbitration is cheaper than litigation. A conclusion can be reached more quickly. The venue is less tense and formalized. The parties have comparatively greater autonomy over the process and scheduling.

One or all of those things end up being true in select arbitrations, of course.

But not always. In fact, arbitration sometimes turns out be a laborious, lengthier, less cost-effective and unsatisfactory process than envisioned by its participants.

On the flip side, it can also be said that litigation potentially has clear upsides or downsides in any given case.

The point centrally advanced in the Journal article is that an arbitration-versus-litigation assessment relevant to dispute resolution should be undertaken early and “carefully examined and discussed on a case-by-case basis.”

Attorneys from a proven New York City commercial law firm can play a key role in that process and help a business client make a truly informed and interest-promoting decision.