Should you arbitrate your business dispute
The operative question about arbitration is normally whether to include an arbitration provision in your business contracts or to sign a contract that includes arbitration. Whether you should arbitrate your company dispute depends on a variety of factors including the contract, the cost, and the purpose for which you desire to use arbitration. Some construction contracts and real estate agreements even commonly contain arbitration provisions that you should consider before signing the contracts. This article addresses the basics of a Florida arbitration.
What is arbitration exactly
Arbitration is like a private trial out of court. There is no judge or jury. The person who decides the case is called the arbitrator. There can be one arbitrator or a panel of three depending on what the parties have provided in their agreement or to which they later agree. Whether it is for a business arbitration or real estate dispute the parties participating in the arbitration choose the arbitrator. The rules in the arbitration are relaxed compared to a court of law.
Binding arbitration versus non-binding arbitration
Arbitration can be biding or non-binding. Binding arbitration means the parties are saddled with the decision and ruling of the arbitrator is final. Non-binding arbitration means that the order the arbitrator makes at the end of the process is more of a suggestion that the parties can accept or reject. Non-binding arbitration can be ordered by a judge in a lawsuit as an alternative to or in addition to mediation. In that event if the party that loses in the arbitration rejects the decision of the arbitrator and later loses at trial, then that party can be liable for attorneys fees in the case. But because many business contracts and real estate transaction agreements have attorney fee provisions in them that rule may have more bark than bite.
Is there discovery in arbitration
If the parties agree then there can be document discovery and depositions. But unlike a judge the arbitrator lacks the power to compel either party to act. There can be intermediate hearings and those are usually by phone. Instead of a trial there is a final hearing in which the parties present their evidence through documents and testimony but because the rules of evidence do not directly apply either party can use evidence that they would sometimes not be able to use in court.
What happens at the end of arbitration
At the end of the arbitration process the arbitrator or panel of arbitrators issues an award to the winning party. This award is closer to the verdict rendered by a jury than to a final judgment issued by a judge in that it cannot be enforced on its own. Final judgments have specific ways in which they can be enforced and my article on what you can do with a final judgment in Florida addresses that in detail. In contrast an arbitration award cannot be enforced unless or until it is converted into a final judgment. The process of conforming an arbitration award into a final judgment as it is called is by the filing of a lawsuit.
But because arbitration is private some participants may wish to avoid a public final judgment and voluntarily pay the award or make arrangements to do so over time. Unless or until a party obtains an arbitration award though they would not normally enter into such an agreement so from a business perspective arbitration may seem inefficient given that the winning party must go to court to enforce their award. However like any legal process arbitration has its own strengths and weaknesses that any business or business person should carefully and fully evaluate before selecting the process.
But because arbitration is private some participants may wish to avoid a public final judgment and voluntarily pay the award or make arrangements to do so over time. Unless or until a party obtains an arbitration award though they would not normally enter into such an agreement so from a business perspective arbitration may seem inefficient given that the winning party must go to court to enforce their award. However like any legal process arbitration has its own strengths and weaknesses that any business or business person should carefully and fully evaluate before selecting the process.
Is arbitration better than a lawsuit for my business
Whether arbitration or a court is better is a question that requires analysis with your business lawyer. Sometimes arbitration can cost more than court. Also the lack of rules can inhibit the efficient, impartial, and fair adjudication of claims. Arbitration can also be slower than litigation. But arbitration is also private and the lack of rules can make it much easier to put on your case. So arbitration is not necessarily bad and court is not necessarily better. It depends on the unique situation.
Before you can make an educated and informed decision about whether to sign a contract that requires arbitration or to put that your business contracts you should discuss that with you business lawyer.
Before you can make an educated and informed decision about whether to sign a contract that requires arbitration or to put that your business contracts you should discuss that with you business lawyer.
Written by Board Certified business lawyer David Steinfeld
David Steinfeld is one of the few Board Certified business law experts in Florida. He has been licensed for over 25 years. He is AV-Preeminent rated, ranked as one of the Best Lawyers in America by U.S. News and World Report, and consistently named a Florida Super Lawyer and one of Florida’s Legal Elite. Dave has also received Martindale’s prestigious Judicial Edition Award for high reviews by Judges, its Platinum Client Champion Award and has a 10.0-Superb rating on AVVO as well as a 10.0 rating on Justia, lawyer reviews websites.
Check out business lawyer David Steinfeld online for helpful videos and articles on Florida business law, real estate disputes, and electronic discovery solutions for your business. This article is provided for informational purposes only.
Check out business lawyer David Steinfeld online for helpful videos and articles on Florida business law, real estate disputes, and electronic discovery solutions for your business. This article is provided for informational purposes only.