Released: March 25, 2011

Arbitration can be as expensive as litigation

Source: Benny L Kass, Washington Post (Free Registration)

Say you have a problem with your contractor who claims you still owe him money. Or maybe the people who signed a contract to buy your house did not go to settlement and now want their earnest money returned. How can such disputes be resolved? Obviously, litigation is one answer, but that is time-consuming, expensive and always uncertain. Often the cost of litigation may exceed the amount of money at the heart of the controversy. But there are alternatives, including arbitration and mediation. In mediation, a neutral person listens to both sides and makes a nonbinding recommendation (putting you back at square one if either party rejects the proposed solution). In arbitration, the decision is binding and is likely to be upheld by a court of law. If two parties have voluntarily signed a contract that requires arbitration, the courts will generally not allow the dispute to be litigated. For a long time, I was a strong advocate of the arbitration process. Over the years, however, I have changed my mind. Sometimes arbitration can be as expensive as litigation. And in court, there are a number of due process protections afforded both sides, which may not be available with arbitration.

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