Mgmt 520 - Week 7 Video Case Study : Judicial, Alternative, and E-Dispute Resolution - Arbitrators Favoring Creditors

Video Case Study: Judicial, Alternative, and E-Dispute Resolution - Arbitrators Favoring Creditors

Litigation is generally something people seek to avoid. It's expensive, time consuming, emotionally draining and unpredictable –- until a judge or jury decides the case, you can never be certain of the outcome. Because litigation is so inefficient for most of us, alternative dispute resolution, such as arbitration and mediation, has become increasingly popular. Arbitration and mediation are similar in that they are alternatives to traditional litigation, and sometimes they are used in conjunction with litigation (opposing parties may first try to negotiate, and if that fails, move forward to trial). Both arbitration and mediation employ a neutral third party to oversee the process, and they both can be binding. However, it is common to employ mediation as a non-binding process and arbitration as a binding process. In simpler terms, binding arbitration replaces the trial process with the arbitration process.

Arbitration is generally conducted with a panel of multiple arbitrators who take on a role like that of a judge, make decisions about evidence and give written opinions (which can be binding or non-binding). Although arbitration is sometimes conducted with one arbitrator, the most common procedure is for each side to select an arbitrator. Then, those two arbitrators select a third arbitrator, at which point the dispute is presented to the three chosen arbitrators. Decisions are made by majority vote. Mediation, on the other hand, is generally conducted with a single mediator who does not judge the case but simply helps to facilitate discussion and eventual resolution of the dispute.

The conventional wisdom among many business owners is that arbitration is more efficient than litigation, and that mandatory arbitration clauses should be included wherever possible. Like most generalizations, however, the truth is not so simple. Here are several factors you...