The terms ‘arbitration’ and ‘litigation’ are often paired off against each other. When or if a dispute arises, we recommend knowing the general differences and similarities between these procedures.
Litigation is a lawsuit filed in a court of law. People may be self-represented, but more often, attorneys represent their clients in moving through the phases of litigation. Phases include filing a complaint (or petition, depending on the court and type of issues involved), answer, discovery, motions, and may eventually involve a trial to a judge or jury.
Arbitration is like litigation in that it is a process to resolve a dispute between two or more parties. It is a private means of resolving disputes. Arbitration may occur non-publicly. It usually takes place when parties have agreed in advance, through a written contract, to arbitrate future disputes on a specified subject matter, in lieu of bringing a lawsuit in court. The arbitrators are paid by the parties to assist in resolving the matter. Pros of arbitration can be that it moves more quickly, can be less expensive, and results in a final resolution earlier. A major con for some is that there is no means of appeal or review after an arbitrator enters an award. The exception to that would require showing deceit or fraud or major errors in the fairness of the process, within very limited circumstances.
More and more, large employers may require new employees to enter arbitration agreements in the onboarding process at start of employment. They will often cover possible future employment-related disputes. Employees should think carefully about rights they give up doing so. Employers should think carefully about how to draft these kinds of agreements and about how to present them to employees for their review and agreement. Courts and policy makers in our legislatures continue to consider how, whether, and to what extent these kinds of arbitration contracts should be enforced.
If you are faced with arbitration in lieu of litigation, or are considering entering an agreement to arbitrate claims, or would like to craft a valid arbitration clause for your business, an attorney may be able to help. An experienced attorney can ensure your rights are fully addressed and you are fully informed about what you give up and what you gain in arbitration versus litigation.
Bonnie Boryca and Erickson | Sederstrom, PC’s team of attorneys are well-versed in these issues.