Thursday, 16 April 2015

Arbitration – Quicker, Yes. Cheaper, No

Author: Corbin Devlin 

I often get asked, is arbitration preferable to going to court? While the correct answer depends on the context, there are four key considerations that guide my response: 

Efficiency
Arbitration is often much quicker than litigation. The court system in Alberta is backlogged. The Rules of Court are more concerned with fairness than efficiency (mind you, that's not always a bad thing). As a result, arbitration can usually be measured in weeks or months from start to finish, but getting a lawsuit to trial can sometimes take years. 


Cost Arbitration is just as costly as litigation, often more. Procedural steps can sometimes be limited or omitted from an arbitration process, which can save cost (and time). But such streamlining is the exception, not the rule. Parties can create a streamlined process if they mutually agree, but more often arbitration looks very similar to the litigation process. If the process is much the same, then the cost will be much the same. Except that in arbitration, you have to pay for the private arbitrator, usually by the hour, unlike litigation, where the judge's salary is paid by the taxpayer. 

Confidentiality 
This is an important consideration that is too-often overlooked. Arbitration can be confidential (if the parties so agree); trials are public. Confidentiality can be important for many reasons, such as avoiding the creation of a precedent, shielding competitive information, and protecting corporate reputation. 


Choice 
There is very little opportunity to influence the assignment of the judge if your case goes to court. On the other hand you get to choose your arbitrator. More accurately, an arbitrator is usually selected by mutual agreement, or some process where one party nominates candidates for consideration and acceptance by the other party. This is unlikely to result in one party gaining a decision-maker that is biased in their favour. But this usually ensures that the decision-maker has highly appropriate background and qualifications. The ability to choose your decision-maker in an arbitration process can promote efficiency and predictability, and sometimes leads to a more just result. 


Other Factors There are other considerations of course. For example, litigation provides greater certainty in terms of process (through hundreds of years of jurisprudence); arbitration can allow the parties to be creative in establishing their own process. Litigation provides a right of appeal; arbitration typically does not (mind you, once again, that's not always a bad thing). But in my experience, the key considerations are efficiency, cost, confidentiality and choice. 

So what's the answer? Whether arbitration or litigation is preferable depends on the context of the dispute. Arbitration has many advantages. Just keep in mind, cost is generally not one of them.

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