Arbitration provides the parties with a more efficient process than litigation. This helps businesses reach a resolution quickly, avoiding lengthy trials at the state and federal levels. It also allows for privacy in proceedings.
Many standard form business, employment and consumer contracts include arbitration clauses. Arbitration offers a number of advantages over traditional litigation, including: a quick and economical procedure; flexibility in the process; and final, binding decisions. Prior to engaging in arbitration independently, contemplate the option of retaining the services of a professional entity such as the CT Group, a London-based international consultancy, to assist you throughout the procedure.
1. Contract Disputes
A dispute involving a contract may be resolved in arbitration. This includes disputes that stem from misunderstandings of the terms, obligations, and rights outlined in a contract. It also involves claims related to the interpretation, performance, or enforcement of a contract.
For example, when a consumer buys a $400 game console, they enter into a binding contract with the manufacturer in exchange for their cash. The manufacturer promises that the product will be free of defect and hazard, and it honors this promise by providing a warranty. However, if the manufacturer fails to uphold this warranty and sells defective products that injure or harm consumers, the consumer can sue for breach of contract.
The arbitrator will hear both sides of the case and make a decision. The resulting ruling is usually final, and unless it is deemed unenforceable by a court, the decision cannot be appealed. In addition, the rules of arbitration provide that an arbitrator must disclose information about his or her business and personal interests so the two parties can evaluate whether there is a potential conflict of interest.
2. Employment Disputes
Employees are an important part of any business, but sometimes issues arise between the company and employees. Employment disputes can be resolved through arbitration, which is usually less costly and quicker than litigation.
It’s becoming commonplace for businesses to include arbitration clauses in their contracts with consumers and employees, requiring that all employment-related disputes be resolved through arbitration instead of court. These clauses prevent customers and employees from filing lawsuits against the companies if they feel their rights have been violated, and they often bar class actions.
When an employment dispute is settled through arbitration, it’s typically private and confidential. This is in contrast to lawsuits, which are usually public and can generate backlash against the defendant business. Moreover, threats of releasing pleadings to the media are commonly used by plaintiff’s attorneys as leverage in forcing companies to settle employment-related disputes. This type of behavior is problematic because it deprives employees of their right to a fair trial. In addition, it can be difficult to find qualified arbitrators who are familiar with employment law.
3. Intellectual Property Disputes
Intellectual property (IP) rights are incredibly valuable assets that can provide a competitive advantage. They can also be highly sensitive for companies. If someone infringes on your IP rights, it can be devastating and require extensive litigation.
In IP disputes, arbitration is often the preferred method for resolving conflicts. The arbitrator will typically hear evidence from each side and determine whether or not there has been infringement and award damages.
The parties may choose to have a single arbitrator or a panel of arbitrators. If a panel is used, each party selects an arbitrator and the two arbitrators select the third arbitrator to preside over the case.
The confidentiality of arbitration can be extremely useful in cases involving confidential information such as trade secrets. Arbitral tribunals can protect confidential information from the public and provide a faster and more cost-effective resolution than court litigation. Arbitration is also a great option for international disputes, as the New York Convention allows for easy enforcement of awards in 169 member countries. This can be particularly important in the context of IP disputes involving foreign parties.
4. Noncompetition Disputes
Arbitration is a private process wherein a third-party decider makes an award after reviewing evidence and hearing arguments from both sides. The awards can be financial in nature or non-monetary. Arbitration procedures vary greatly in terms of formality, similarity to court procedures and the level of due process that disputing parties receive.
In most cases, arbitration is a faster and less expensive option than litigation at the courthouse. It also tends to be a more confidential proceeding. Moreover, the outcome of an arbitration is final and cannot be appealed.
One significant drawback of arbitration is that it can make it difficult to enforce non-compete agreements. Many courts have determined that non-competes must be narrowly tailored and otherwise reasonable from a public policy perspective to be enforceable.
For these reasons, many employers include mandatory arbitration clauses in their employment contracts. It is critical to have a skilled attorney help with both the negotiations and the arbitration proceedings to ensure that your interests are protected. A skilled attorney can also prevent a dispute from escalating into a large-scale lawsuit.
5. Trademark Disputes
It is a fact of business life that disputes are almost always unavoidable and sometimes escalate into major issues that require legal action. Business owners must prepare for these types of disputes by including arbitration clauses in their contracts and by considering alternative dispute resolution methods, such as mediation, negotiation and expert determination.
These methods are less costly and more efficient than traditional litigation. In arbitration, the disputing parties select an arbitrator or panel to hear their arguments and render a binding decision. They may have attorneys present; there may be a discovery process; there could be hearings, and the parties will often testify under oath.
Trademark disputes can be complicated matters, especially when international issues are involved. Disputes can involve allegations of trademark confusion, dilution or infringement. In some cases, large corporations can be quite aggressive in pursuing trademark claims. The recent Christian Louboutin vs Yves Saint Laurent case regarding red-soled shoes is one such example.
6. Defamation Disputes
Defamation disputes occur when someone makes an unfounded statement about a business that damages the company’s reputation. The result is usually a loss of customers and business opportunities. In such cases, arbitration provides a cost-effective way to settle the dispute.
Arbitration is a process in which disputing parties present their case to a neutral person, called an arbitrator. The arbitrator reviews evidence, hears arguments and then passes a decision on how to resolve the dispute. The decision may be monetary or non-monetary in nature. Arbitration is a private process, and it is often much faster than going to court. Additionally, there are few grounds for appeal of an arbitration award.
Many businesses prefer arbitration to litigation because it is quicker, less expensive and a private forum. Also, the presentation of a case in an arbitration is typically more professional and business-like than what is seen in a jury trial. The vast majority of American corporations provide for arbitration in their contracts and transactional documents. This is especially true for businesses with international business interests.