Arbitration has an undeserved negative reputation in the business and employment rooms. Many workers will argue bitterly about contract terms requiring arbitration for any employment law dispute, despite federal courts repeatedly upholding the right to require such terms in contracts.
In fact, people may refuse jobs at companies that mandate arbitration. The same is true for businesses, another company may not want to sign a contract with your organization if mandatory arbitration is a standard inclusion in your contractual agreements.
Despite people’s aversion to the idea of arbitration, at least when it is mandatory and binding, it can still be a very valuable tool for business disputes. Even if you don’t require it in your agreements with others, you may want to suggest it when your business faces a dispute with a worker, a supplier or another company.
How arbitration helps
When you go to court, you have a chance to present your side of the situation. When the conflict has become adversarial or either party believes they suffered harm caused by the other party, negotiations and mediation may prove fruitless.
Arbitration is a process very similar to court, and as such, it can provide closure for those making a claim. The arbitrator fills a real similar to that of a judge and can decide how much impact the claims one party makes should have on the outcome of the dispute.
Even when compromise seems impossible, an arbitrator may resolve the matter in a way that both parties recognize is reasonable. They may also recognize that what happens in our arbitration is likely what would happen in a court of law as well.
The outcome doesn’t have to be the finals solution
Arbitration does not need to be a binding process. Instead, you can take the decision made after arbitration and use that as a starting point for your final negotiations with the other party. That way, you both have some degree of control over the outcome, and you can discuss all of the details of the case thoroughly without them becoming part of the public record.
Attempting arbitration or another form of alternative dispute resolution, like mediation, before going to civil court can be a viable solution for those currently embroiled in a conflict with another business.