What is the best way to litigate a dispute? Is it always necessary to go to court or is there a type of mediation arbitration?

Question: I’m an author who is trying to find a publisher for my book. I’ve found a promising one, but I’m concerned about one clause in the contract, which states that in the event of a dispute, matters shall be resolved by arbitration. What is arbitration, how does it differ from going to court, and is it to my advantage to arbitrate disputes rather than have them resolved by the court system?

Response: Let’s start with acknowledging one thing: your publisher thinks that arbitration is in their interest—otherwise, they wouldn’t put an arbitration clause in the contract! That doesn’t mean that it may not be good for you, too, but it’s always worthwhile to bear in mind that anything the other party puts into a contract is, presumably, good for them.

What is arbitration? Arbitration is one of the two main alternative dispute resolution mechanisms or processes—the other is mediation. The “alternative” in “alternative dispute resolution” means “alternative to litigation”—arbitration and mediation are ways to resolve disputes without or short of going to court.

If you put litigation, arbitration, and mediation on a continuum or line, from most formal to least formal, arbitration would be squarely in the middle. Litigation is going to court: you need an attorney, there are complex rules of evidence and regarding how you file papers; there are rules for how to object to questions, evidence, or decisions; and there are rules for how to appeal outcomes you don’t like.

Mediation is negotiation. A neutral third party—generally one with some expertise in the industry and/or in being a mediator—will help the parties come to an agreement. There are no formal rules at all, and the mediator’s decision is not binding; it’s merely a recommendation.

Arbitration is basically “court” without the rules, formality, or much of the cost. Typically one to three arbitrators will preside over the arbitration; the two parties usually have some say in selecting them, to ensure neutrality. Evidence is presented, as in court, but the rules for what evidence may be presented, and how, are substantially relaxed. Similarly, paperwork and filing is streamlined, technicalities are less important, there is no jury (only the arbitrators), and the timeline is vastly accelerated compared to most litigation.

The advantages of arbitration over traditional litigation are its speed, relative lack of expense, and relative informality, which many feel make it more likely that important or valuable evidence will be considered without it being tossed out or diminished on a “technicality.”

The disadvantage is that, as the name implies, arbitration may be more “arbitrary” than litigation. Arbitrators are not bound by past decisions (called precedent) the way courts are—this makes their decisions inherently less predictable. And unlike courts, with well-developed appeals processes, there often is no appeal from arbitration—the decision is binding and final. (Of course, given the cost of an appeal , the ability to appeal in court may be more theoretical than actual.)

Also, since the arbitrators often are people with industry experience, they will usually understand the issues well—but are sometimes accused of being too industry-friendly, with some bias in favor of companies and against individual persons. They are probably less likely than a jury to be swayed by sympathy.

You can see why your publisher would prefer it: arbitrators who understand their business; faster and less expensive; and, owing to the lack of appeals options, greater certainty to the outcomes.

Whether it’s good for you depends on how you value, on the one hand, the speed, efficiency, and industry knowledge of the decision maker (arbitration) versus the potential ability to play more to jury sympathy and the possession of more appeals options (litigation). The lower cost compared to litigation, however, is an advantage to any party.

Note that while arbitration is less formal or technical than court, it still has its rules. Also, an experienced person can present the evidence and arguments far better than an inexperienced one—especially an inexperienced one with his or her own personal stake in the outcome. That’s why it is strongly recommended to have a lawyer with arbitration experience represent you. (The lower costs vis-à-vis litigation in large part comes from how streamlined arbitration is—there’ll typically be far fewer billable hours than in litigation.)

Answered by Steven Zweig

Additional Resource: American Arbitration Association

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