A few months ago, I had the honor of participating in a dispute resolution forum as part of a panel of legal experts from around the world. The panel, entitled “IRG Disputes Group Virtual Series: Staying Ahead of the Curve,” was hosted by the international professional services network IR Global. This post will summarize my comments from the first of three sessions.
The question presented to the panel in this session was, “What factors influence your choice of arbitration forum when a dispute arises?” The three main questions I initially consider when considering arbitration include:
- What does the dispute actually involve — and what are the financial stakes?
In many cases, the cost benefit simply doesn’t justify going to arbitration. I tend to advise arbitration for disputes that involve relatively monetary value. A smaller transaction involving smaller business entities often means that a client would spend more on attorney fees and tie up more resources than they would by taking the dispute to a local court.
In these lower-value cases, I usually recommend employing a mediation clause that obliges the parties to conduct mandatory mediation prior to litigation. If an arbitration clause already exists in the contract between the two parties, it may be possible to coordinate with the opposing side’s legal counsel to replace that clause with a mediation clause.
- What is the area of law to be addressed?
Some legal disputes are more complex or specialized in nature than others. I’m not generally inclined to advocate for arbitration when it comes to a simple, straightforward contract dispute.
Arbitration usually holds greater value for issues that include distinct, unique values that local courts might not be able to adjudicate effectively. For example, many local courts lack experience in surety or intellectual property cases — and bringing them up to speed on the nuances of these cases can be a waste of an attorney’s time and energy when experienced arbitrators in legal specialties are available. The ability to seek out arbitrators who have extensive experience in a specific area of the law is invaluable for more effective arbitration and more effective outcome.
- Where are the parties involved in an arbitration issue or potential contract based?
I think arbitration can be significantly more effective than a court trial when the case involves different parties spread across the country or even across international border lines. The complications introduced by different (and potentially conflicting) state or national laws can make a court dispute enormously unwieldy and inefficient.
Arbitration can provide a much smoother, simpler experience – not least because most U.S. states have adopted very similar arbitration enforcement statutes. If you want to get the most benefit from your arbitration clauses, I can advocate for specific types of cases to adhere to the laws of specific states that handle such legal areas particularly effectively, and in a manner will likely prove to your advantage. (We will address these points in my summaries of the next two forum sessions.)
The next post in this three-article series will summarize my comments on the second session of “IRG Disputes Group Virtual Series: Staying Ahead of the Curve,” in which we discussed post-arbitral enforcement proceedings. Post TWO in this series can be accessed HERE. Post THREE in this series can be accessed HERE.
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