Arbitration Myths

[update: see Commentary by Federal Judge about this article here]

Ever wonder what are the most common myths about the arbitration process? Below is a discussion of five misconceptions about arbitration from an article by the National Arbitration Forum Blog:

Arbitration costs more than court – In most consumer cases filing fees in arbitration are significantly less expensive than the filing fees required in many trial courts. Arbitration filing fees for consumer claimants at the National Arbitration Forum, for instance, are low. They start at $19 for smaller claims. Moreover, individual parties can choose to proceed in arbitration without the need to engage or pay an attorney.

The arbitration process is no quicker than litigation – To arbitrate or to litigate, that is the question. Many people advocate for litigation saying it is quicker than arbitration. This simply is not true. The arbitration process is speedy. Analysis of arbitration involving consumer contracts shows a median case duration of four to six months whereas the Bureau of Justice Statistics shows that contract lawsuits last a median length of 15 to 20 months.

Arbitration is nothing more than a “kangaroo court” – Inaccurate reports liken arbitration to sham legal proceedings that deny rights in the name of expediency. While it is true that the arbitration process is timely, it is not true that due process rights are forfeited. Arbitration, as conducted by leading organizations such as the National Arbitration Forum, requires arbitrators to follow the same laws that judges in court cases follow. And, arbitration decisions are approved by a court judge before becoming a legally-enforceable judgment.

Businesses win more than consumers in arbitration – Have you ever heard that arbitration is better for businesses than everyday consumers? Not true. One of the most important benefits of arbitration, a faster, lower cost, and superior alternative to litigation, is that it strives to provide parties with the same outcomes they would have received in court. Studies show that arbitration outcomes are the same or even marginally better for consumers than litigation outcomes. This means that consumers get a fair shake in arbitration.

No one seems to like or even understand arbitration – Unfortunately this is far from the truth. Surveys of American consumers, lawyers, and courts show that they consistently and resoundingly acknowledge arbitration. One former arbitration participant said, “I would most recommend the arbitration process for both friends and family in order to get a fair hearing and decision. I would like others to know my experience in order to create awareness of arbitration in this society where justice is sometimes prevented.”

Any thoughts?

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