When disputes arise between a business owner and other stakeholders such as debtors, creditors or shareholders, the parties need to come up with a resolution strategy. The first instinct of the aggrieved party is usually to go to the courts. However, litigation isn't always the best route when handling business disputes. A great alternative is arbitration, where both parties hire a neutral third party. The arbitrator listens to both sides and makes a final and binding decision. If you're in the middle of a dispute with any stakeholders in your firm, here are four reasons why you should employ arbitration as a dispute resolution technique:
Control Over the Process
One disadvantage of litigation is that you have no control over the process. The judge does. They establish rules regarding discovery, time limitations and hearings. Your lawyer will have no choice but to comply with the court, a fact that could sometimes play against you. However, with arbitration, both parties have control over the process. With the guidance of the arbitrator, you can establish your own rules regarding the issues mentioned above. Also, you can schedule hearings for when both parties are most comfortable.
Low Cost of Dispute Resolution
Litigation is expensive. Since you don't have control over the proceedings, they may drag on for a long time, and this increases attorney fees. You also have to pay court fees and other associated costs. As a budget-conscious business person, using arbitration to resolve disputes with stakeholders can end up being an affordable process. You only need to pay attorney and arbitrator fees. The latter is cheaper as both parties split the amount. Since arbitration is faster than litigation, the overall cost of the entire process is significantly lower as compared to litigation.
Choice of an Arbitrator
Litigation doesn't offer you the luxury of choosing your own judge. Therefore, if the matter at hand is complicated, the judge will rule in favour of the party that presents their case best. If your lawyers and expert witnesses don't convince the judge, you may end up on the losing end. However, with arbitration, you get to choose an arbitrator who is knowledgeable about the subject matter. For example, if the dispute is IT-related, you can find an IT expert to oversee the resolution. Their expertise on the subject will allow them to give a fair ruling on the issue.
Private and Confidential Proceedings
All matters that end up in court become public knowledge. Thus, your customers, financiers and other stakeholders will find out that you are in litigation. This can generate bad press for your business and hurt your brand. Therefore, if you want to keep things private and confidential, use an arbitrator. Whatever you resolve with the other party remains out of the public, and you can protect your business from harm.
These are the reasons why you should choose arbitration to resolve business disputes. Talk to a corporate lawyer for professional assistance with this and other commercial law issues.