2014 In-House Counsel Survey On Arbitration

Today’s General Counsel has reported the latest survey concerning whether arbitration should be preferred to litigation to resolve disputes.

In-house counsel appreciate the less formal setting for resolving disputes via arbitration, as well as the possibilities that it allows to avoid bad court systems and runaway jury decisions. When sensitive facts were involved, such as with a customer or a key vendor, they also preferred arbitration. Others chose arbitration since they perceived it as being less costly and because discovery was limited.

On the other hand, others did not like arbitration precisely because it limited discovery, they did not like the fact that arbitration was less likely to provide an all-or-nothing decision, and they did not like the fact that arbitration decisions could not be appealed (although this can also be considered an advantage, since it means that a binding decision can be rendered more swiftly). Several respondents also indicated that, cost-wise, they found arbitration to be the same as litigation.

Slightly more preferred arbitration to litigation. One fourth preferred arbitration over litigation, and 21% preferred litigation to arbitration. 42% of respondents indicated that did not favor arbitration or litigation, which they found to be similar, and the only reason why they used arbitration to decide their legal dispute was because it was specified in their contract.

In short, arbitration was seen as being fairly similar to litigation. Since a dispute resolution system with no appeals should cost less than a State-sponsored dispute resolution system with multiple levels of appeals, if arbitration improves its cost-effectiveness it should be able to maintain an edge on litigation for business customers, however.