I’m in a dispute with someone, and I just took a look at our contract and it has an arbitration clause. I’ve heard of arbitration on the news, but it always sounds complicated. Is it a good thing or a bad thing? If it’s bad, can I get out of it?
Arbitration is an alternative to pursuing litigation in court. Sometimes, parties include an arbitration clause in their contract that requires that they arbitrate disputes instead of going to court, but parties may also voluntarily submit a dispute to arbitration even without an arbitration clause.
Arbitration is usually faster than litigation and typically involves a much simpler discovery process. Arbitration’s advocates often say that it’s less expensive than litigation, but that’s not always the case. Arbitrators can charge upward of several hundred dollars per hour, but a judge doesn’t charge anything for his or her time.
Arbitration usually requires the same amount of preparation as a court trial, but the parties can choose a more relaxed system of preparing and presenting evidence. Arbitrations can be kept confidential, unlike most trials, which can be desirable.
There are drawbacks to arbitration. Arbitration awards are usually final and not subject to appeal. Although unlikely, an arbitrator could choose to ignore a legal principle that would otherwise be controlling, and there’s little that an aggrieved party can do.
Sometimes it’s better to have a jury hear a dispute rather than one arbitrator. A jury may have more sympathy for you if you’ve been wronged, and may be more likely to award punitive or emotional distress damages.
You may have a few options if you find yourself wondering how to get out of the arbitration clause to which you agreed. If your agreement to arbitrate is both procedurally and substantively unconscionable, or extremely unfair, you may be able to use that to get out of mandatory arbitration.
Procedural unconscionability involves the manner in which the agreement...