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.
