Many a times, when we are entangled with issues pertaining to the law, the first words that come to mind are lawyers and court. And yes, most of the times you have to hire an attorney to represent you in the courtroom but that does not have to be the case each and every time. There is another way of solving issues outside the courtroom. It’s not rocket science, it is called arbitration.

What Is Arbitration?

In simple terms, arbitration is a process in which a dispute is submitted, by mutual agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. This means that rather than appearing before a judge in the courtroom, two parties can solve their differences outside by hiring a paid referee who is known as the arbitrator.

For Example, you have not been paid the wages for the last two months and you decide to take legal action against your employer. But instead of going to the court, you and your employer decide to handle things outside of it by hiring a neutral person who is going to get paid from both of you and will listen to the arguments. He or she will be neutral in their judgment and after listening to both the sides, will give the decision accordingly.

So Why not arbitration all the time? What makes it different to a legal court hearing? How does a judge differ from an arbitrator? Let’s find out.

Arbitration vs. Litigation

Some of the main differences between a litigation and an arbitration are:

• A judge of the court gets his salary from the state while an arbitrator is paid by the two parties (and it’s a hefty one)
• Like a judge or the jury, the arbitrator’s decision is binding. But unlike a judge, you can’t challenge an arbitrator’s decision even if he/she is wrong in their final judgment (you can’t appeal in a higher court eh)
• There is no jury in an arbitration. Only a single person known as the arbitrator
• The arbitrator can be handpicked by the parties but a judge or jury is selected by the state.

Arbitration – Is It Good OR Bad?

Now that’s something you’ve got to think about properly. There are always two sides to a coin.

The Good

Arbitration is good or beneficial in the way that you don’t need to officially register your case in the court, face all the court hearings, hire attorneys on high wages and appeal before the judge every week. Another benefit is that the cost of hiring the arbitrator is shared equally by both the parties (it might be too high though). As for litigation, each party have to bear their own expenses. Furthermore, the result of an arbitration is quicker as compared to a result in the court which undergoes a multitude of hearings.

The Bad

That being said, not everything is green about an arbitration. Like mentioned above, unlike a judge or jury, the decision of an arbitrator is final and cannot be challenged. So you either accept it or cry (you still have to accept it). Another drawback is that arbitrators demand the big bucks for their expertise ($10000 e.g.). Even if you’re paying half of that and lose the case, you lose the money as well. Another drawback is that arbitrators tend to make hasty decisions sometimes, ignoring all the facts of the case. This might lead to you losing the case. Lastly, the chances of biasness are always there.

So What Should You Do?

The simple answer is – it depends. It depends on the magnitude of the case, the time you have, the funds you have and what is on the stake. If it’s a minor case of a couple months’ salary not paid, an arbitration is handy and gets the job done quickly. If it’s a case of attempted murder or robbery, the best course of action is through the courtroom. Cases of relatively less importance and magnitude are well-served in arbitration while the big cases are best left for the judges and jury to handle.