Pros & Cons of Arbitration

Arbitration is a kind of alternative dispute resolution (ADR) wherein a third party arbiter hears both sides. This is considered as an alternative resolution, instead of both parties bringing the case to the court. Some parties choose this process because it would be faster and more cost-efficient for them than the litigation process. One of the reasons why the arbitration process is shorter is because lots of the procedures in presenting the pieces of evidence are no longer included. Once the arbiter decides, it is already final and there will be no chance for appeal.

In most cases, parties entering a transaction include an arbitration clause in their contract before signing it. If you are about to enter an agreement with another party, whether related to real estate transactions or not, knowing the advantages and disadvantage of this process would be highly important. Contact us today.

What are the advantages of arbitration?

Over litigation, the following are just some of the crucial good things about arbitration as an alternative dispute resolution for real estate transactions:

Speed

As stated above, the process is a lot shorter compared to litigation process. As a matter of fact, resolution can be achieved in as fast as single hearing. This would, of course, depend on the complexity of the case at hand. Hence, parties may lead to an amicable settlement in just a month or even less.

Cost

Litigation process usually requires parties to attend numerous court hearings. It would already be fast if the case will be closed in a year. However, in most cases, it takes several years before the court makes a decision.

What are the setbacks of arbitration?

On the other hand, however, there are some disadvantages of this kind of resolution when it comes to resolving real estate disputes and the like. Some of the setbacks are the following:

Lack of evidence-based hearing

As stated above, one of the main reasons why arbitration is faster than litigation is because some lengthy presentations of evidence are already excluded in the process. What this means is that both parties will solely be relying to the skills and expertise of the arbiter in handling the case.

Consequently, there will be no deposition or interrogatories that will be taken too. Hence, the discovery process that is usually present in litigation hearings is not in place.

Lack of appeal process

It is also stated above that parties may no longer file an appeal once the arbiter has made a decision. This is specifically true if the parties agreed to enter into a binding arbitration, as stated in their contract. As a consequence of this, even if both parties think that the decision was biased and unjust, they can no longer do anything about it anymore.

How to make arbitration successful?

There are ways in order for arbitration to be successful. These are:

Choose an arbiter wisely

The arbiter should be reputable, experienced and expert in the field or issue of dispute.

Make the arbitration binding

Making the arbitration not binding will only result to an open-ended resolution.

Resolving Real Estate Disputes: Difference Between Arbitration or Mediation

Both arbitration and mediation are considered as better alternatives when resolving any kind of disputes between parties. However, these two (2) forms of alternative dispute resolutions (ADR) have different mechanics. It is in this light that knowing their differences would be crucial when choosing which is more appropriate. Contact us today for legal help with any questions.

What is dispute resolution through mediation?

In general, mediation is a process wherein a neutral third party examines all the aspects of a dispute. The mediator will then discuss it with both of the disputing parties and then come up with a recommended mutual agreement. Particularly, both sides will have the venue to present their views on the issue during the mediation. The mediator will then talk to each of party in a caucus. This is with the objective of working out a settlement. At the end of the process, the mediator will then present the potential solution that he or she is thinking, based on the pieces of information gathered.

One of the main features of mediation is that the mediator does not make decision. He or she does not also force parties to settle the dispute in any way. Hence, what this means is that the potential solution is not binding. Mediation is just a facilitation. In other words, both parties may agree to resort to litigation if they are not satisfied with the results of the mediation process.

In order for this process to be successful, the mediator needs to be an expert in the field of the dispute. There are times that the chosen mediator of the parties is an attorney, but it is not necessary.

What is dispute resolution through arbitration?

On the other hand, another alternative way to resolve real estate disputes is through arbitration. Similar to meditation, this process will also involve a neutral third party, who should be an expert in the area being disputed as well.

However, unlike mediation, which is only considered as a facilitation process to come up with a possibly non-binding mutual agreement between the disputing parties, arbitration is a hearing process. The intention will be for the arbiter to come up with a decision, rather than a recommendation. The arbiter will then need to hear each side before making a decision. Once the arbiter makes a decision, it is already final and parties may not appeal anymore.

What are their major differences that you might not know?

Though both are considered as alternative dispute resolution processes, they have major differences. Some of these are the following:

Form

One of the main differences of arbitration from mediation process is that the former is formal while the latter is informal.

Goal

In mediation, the goal is to resolve misunderstanding between parties while arbitration process aims to come up with a decision in a dispute.

Power

A mediator has no power in order to force either or both the parties in coming up with a decision. In contrary, the parties are required to follow the decision of an arbiter.

Withdrawal

In mediation, parties may opt to withdraw from the mediation process anytime. However, when arbitration begins, there is no way for either of the party to go away with it.

Contact our Austin business & litigation attorneys today for legal advice regarding your real estate dispute.