Arbitration
Arbitration is a private and confidential dispute resolution process that involves appointing a neutral third party, called an arbitrator, to make a binding decision on the dispute. Arbitration is commonly used as an alternative to litigation because it offers several advantages, such as speed, privacy, flexibility, and cost-effectiveness.
One significant advantage of arbitration is its speed. Arbitration typically resolves disputes faster than litigation because it has a more streamlined process that eliminates some of the procedural formalities that can slow down the litigation process. Additionally, arbitration allows parties to schedule hearings and proceedings at their convenience, rather than being tied to a court schedule.
Another advantage of arbitration is privacy. Arbitration proceedings are typically confidential, which means that parties can avoid the public scrutiny that often accompanies litigation. This confidentiality can be particularly important for disputes that involve sensitive or proprietary information.
Arbitration is also flexible. Parties can design the process to suit their needs and preferences, such as choosing the location, language, and rules that will apply to the arbitration. Additionally, parties can choose arbitrators who have expertise in the subject matter of the dispute, which can lead to more informed and fair decision-making.
Despite these advantages, arbitration has some disadvantages that homeowners should consider. For example, arbitration has limited discovery, which means that parties may not be able to gather as much evidence as they would in litigation. Additionally, arbitration decisions are not typically precedential, which means that they may not have the same impact on future cases as court decisions.
Another potential disadvantage of arbitration is that the arbitrator’s decision may be biassed. Unlike judges, arbitrators are not always required to follow the law or apply legal precedent. This discretion can be both an advantage and a disadvantage, depending on the circumstances.
Finally, it is essential to note that arbitration is distinct from mediation, another common form of alternative dispute resolution. While arbitration involves a binding decision made by a neutral third party, mediation is a non-binding process where a mediator helps parties to reach a mutually acceptable resolution.
Factors to Consider When Choosing Arbitration
Related content: Arbitration: Is It An Effective Form of Dispute Resolution?
Litigation
Litigation is a formal legal process in which a case is presented in court and resolved through a judgement. It involves a trial by judge or jury and is conducted in accordance with the rules of the court. One of the main advantages of litigation is that the parties have the right to appeal a decision if they are unhappy with the outcome. Additionally, there is often a more thorough discovery process in litigation, allowing parties to gather more evidence to support their case. Litigation can also result in the establishment of legal precedent, which can be important for future cases.
However, litigation can be a lengthy process, taking months or even years to resolve a case. It is also a public record, which means that sensitive information may be disclosed in court. Furthermore, litigation can be expensive, as parties must pay for legal representation and court fees. When compared to arbitration or mediation, litigation is a more formal process, where parties are bound by the decisions of the court.
Factors to Consider When Choosing Litigation
Related content: The Litigation Process: What You Need to Know
Choosing Between Arbitration and Litigation
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Choosing the Right Dispute Resolution Method for Your Building Dispute
Deciding between arbitration and litigation for your building dispute is an important decision that requires careful consideration of various factors, including the complexity of the dispute, the amount of money at stake, the need to preserve business relationships, the level of control desired over the process, and the level of expertise required to decide the dispute. Homeowners must weigh the advantages and disadvantages of each method before deciding. As a construction lawyer with over 10 years of experience in construction law, I recommend seeking legal advice before making a final decision.
To ensure that your building contract is fair and transparent, download our “Building Contract Assessment Checklist.” As a construction lawyer, I highly recommend that homeowners use this checklist before entering into any residential building contracts. By doing so, you can avoid disputes and minimise the risks of costly legal battles in the future.
