The next chance you get to review one of your business contracts, or even a purchase order or order acknowledgment form, take a look at its provision for what forum to use if a dispute arises about its terms, conditions and performance obligations. Chances are that you will see a choice of law clause, but not a reference to court jurisdiction.
In fact, many if not most business-to-business contracts today, and many contracts between businesses and consumers, have mandatory alternative dispute resolution mechanisms built into them.
What makes choosing something like binding arbitration better than going to court? This post will examine a few of the reasons behind the popularity of alternative dispute resolution in business agreements.
Money: Litigation is expensive. Especially if the underlying disagreement is not itself costly, it is not unheard of for the costs of preparing a contract dispute for trial and conducting trial to outstrip the dollar value of the subject of the disagreement. Alternative dispute resolution typically costs much less to go through.
Time: Civil litigation can take years to resolve from the time the dispute first comes up to the delivery of a court decision. Alternative methods, such as arbitration or mediation, usually can be concluded in significantly less time.
Control: Let’s assume that you have a potentially complex dispute to resolve, like one that involves intellectual property. Not every judge, and certainly not most jurors, are going to be familiar with things like patents and trade secret protections. But often with arbitration you can choose an arbitrator to hear the matter who does have such experience.
Enforceability: Arbitration in particular can be binding – that is, the decision of the arbitrator can be enforced in court if necessary. So it offers the economical and time advantages above, and is just as enforceable as a court judgment.
If your contracts are not using alternative dispute resolution as a dispute resolution mechanism, you may want to consult with an Ohio business law firm to see if using this alternative to litigation is right for your company. Or if you are engaged in a business dispute and the contract calls for alternative dispute resolution, in most cases you can have legal counsel to assist you in the process just like it would if you were going through court instead.