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Should you opt for binding or non-binding arbitration?

On Behalf of | Jan 19, 2024 | Alternative Dispute Resolution

Arbitration is a form of alternative dispute resolution (ADR) that allows parties to settle their disputes without going to court. In arbitration, a neutral third party listens to the arguments and evidence of both sides and makes a decision. The decision can be binding or non-binding, depending on the parties’ agreement.

Binding arbitration means that the arbitrator’s decision is final and enforceable by law. Neither you nor the other party to the dispute can appeal or challenge the decision in court unless under exceptional legal grounds, such as fraud, bias or lack of jurisdiction.

For non-binding arbitration, the arbitrator’s decision is not legally binding and can be rejected by either party. As such, you can proceed to litigation if you wish or try to negotiate a settlement based on the arbitrator’s decision.

The pros and cons of each approach

Each option features a unique set of advantages and disadvantages. For instance, binding arbitration concludes with a final, legally enforceable decision that the parties involved must adhere to. This finality offers a complete resolution and reduces the likelihood of prolonged legal battles. However, it also means giving up your right to a trial, where a judge or jury can review the arbitrator’s decision.

Non-binding arbitration, on the other hand, provides a more collaborative approach. The arbitrator’s decision is more of a recommendation than a mandate, allowing the disputing parties to explore alternative solutions. The downside of non-binding arbitration lies in its lack of enforceability. If one party disregards the arbitrator’s recommendation, the dispute may persist, necessitating further legal action to achieve a resolution.

Factors to consider when choosing between the two

The choice between binding and non-binding arbitration ultimately comes down to the particulars of your situation. The complexity of the dispute, individual preferences, the desired level of finality and the willingness to cooperate are some factors that can help you make an informed decision. Reaching out for legal guidance for an informed assessment of your dispute can help you choose the most suitable option aligned with your unique circumstances and help you to protect your interests along the way.