Vol. 46, No. 7
Order in the Hearing!
On the spectrum of alternative dispute resolution (ADR) options, arbitration is the last resort. But it's still better than going to court, ADR experts say.
"Going to court is the most protracted, expensive, belligerent way to solve problems," says Peter Phillips, vice president of the CPR Institute for Dispute Resolution, a New York nonprofit that helps employers design ADR programs.
Like litigation, arbitration is an ad judicatory process full of formalities and rules. It, too, involves a neutral third party—an arbitrator, or private judge—who hears a case and imposes a resolution. But arbitration is almost always less time-consuming and less expensive than going to court. Unlike litigation, arbitration cases often take months—not years—to resolve.
Other advantages of arbitration include the following:
Both sides exert control over who hears the case and where; you can't pick a judge or courtroom.
Arbitration guarantees a private hearing, not a public one that must wait its turn on an overloaded court docket.
An arbitrator's decision is usually final and binding, which avoids the time and expense of appeals.
Most programs allow the same relief that is available in court.
These advantages have led to a steady increase in the use of arbitration to resolve all kinds of disputes, according to the New York-based American Arbitration Association (AAA). While employment cases make up only a tiny part of the AAA's caseload—1.4 percent, or 8,197 of the 584,791 cases filed from 1996 through 2000—the number of these cases nearly doubled during this time.
Still, arbitration is not the only, or necessarily the best, way to settle disputes, ADR experts say.
"A good arbitration agreement can be very effective," says John Hansen, a partner in the San Francisco law firm Nossaman, Guthner, Knox & Elliott L.L.P. But he adds, "It is not in itself a panacea. Some arbitrations become just as complex as a lawsuit."
Others point out that mediation, in which a neutral third party engages in informal shuttle diplomacy to help parties air their differences and negotiate a settlement, has proved more effective and popular than arbitration.
While arbitration produces a winner and a loser-and, often, residual bad feelings—mediation encourages disputants to work out their own solutions. "Identifying and fixing problems is more important than vindicating legal rights," says Phillips. About 85 percent of external ADR cases are settled through mediation, says the AAA.