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The arbitrators' case against litigation
Readers of the Star Tribune deserve a more accurate understanding of the arbitration process and of the case cited in Marshall Tanick's article Monday.
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Readers of the Star Tribune deserve a more accurate understanding of the arbitration process and of the case cited in Marshall Tanick's article Monday.
Simply stated, arbitration is everything that Tanick says it is not -- and more.
Confidentiality. Unlike litigation, arbitration is confidential. Unless the parties opt otherwise, no one will know that they ever had a dispute. Anyone has access to the litigation docket system of any court.
Arbitration is a voluntary, contractual process, where the parties can dictate precisely how it should be conducted and control its costs, efficiency and neutrality.
Controlling costs and efficiencies. Arbitration is overall less costly and faster than litigation, and only is expensive and lengthy if the parties let it be so. They control the entire discovery process (i.e. the production of documents and depositions). They control the powers and authority of the arbitrator (try that with a judge) and how much the arbitrator will be paid. They control when and where the arbitration will take place, how long the process should last and how it should be conducted.
Controlling neutrality. Unlike litigation, in which the parties have no control over the selection of a judge (some are known for their likes and dislikes), parties in arbitration can exercise a great deal of control concerning who will hear their case. They can select arbitrators knowledgeable in just about any industry. In litigation, juries can sometimes not be knowledgeable about the business or technological issues involved. In arbitration, the parties can have one or three arbitrators (a good option when neutrality is a concern) chosen from a pool of experienced and trained arbitrators (all major arbitration organizations have excellent training programs) -- including former judges, experienced lawyers, business executives or anyone who has qualifications the parties decide are relevant and important to their case.
Finality of the award. When selecting arbitration, the parties knowingly accept that the arbitrator is a "final judge of both law and facts." Except for narrow specific situations involving corruption, fraud, undue means, evident partiality or excess of power by the arbitrator, awards cannot be reviewed. Costly and lengthy appeals are rarely an option.
The two years of litigation that followed the Camp Snoopy decision that Tanick cited was an attempt by the losing party to reverse the award. After hundreds of thousands of dollar in legal fees, the courts in fact upheld the original award and reaffirmed that "arbitration awards are highly favored in Minnesota and our standard of review is extremely narrow."
No one has ever argued that arbitration is the best process to resolve all disputes. However, the vast majority of commercial disputes can and should be resolved through arbitration -- because it works.
Alain Frécon is president of Frécon & Associates and is a national and international arbitrator and mediator based in Minneapolis. He is a member of the commercial panels of the American Arbitration Association, the International Institute for Conflict Prevention & Resolution and the Financial Industry Regulatory Authority.
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