How Arbitration Clauses Can Impact Your Commercial Litigation Strategy

Disputes are a part of doing business. Resolving these disputes efficiently and effectively provides clarity for your business operations and ensures strong relationships moving forward. 

Arbitration represents one method for resolving disputes in the business world. Many times, arbitration clauses are incorporated into commercial agreements. The results of these arbitration clauses often shape how parties resolve the issues at hand. 

While arbitration clauses can encourage problem-solving that is more efficient and confidential, these scenarios also have their own share of potential pitfalls for business owners. If you find yourself in need of guidance in relation to an arbitration clause, contact the Knox Law Group today. 

How are arbitration clauses enforced?

Arbitration allows two parties to mutually appoint a third party who acts as a neutral intermediary. The arbiter, or panel of arbiters, can hear legal arguments on a contested issue and render a decision that is binding upon the parties. 

Legal representation is permitted in arbitration just as in the courtroom. However, a key difference is that the arbitration proceedings are confidential as opposed to the results of a contested hearing or trial. 

How arbitration clauses impact commercial litigation proceedings

Parties to business contracts often include arbitration clauses due to how arbitration allows for speedier resolution of issues. Additionally, once the arbitration process has come to a close, the award(s) are final. 

Courtroom-based litigation is more formal and structured in its proceedings, as opposed to arbitration. Frequently, parties to commercial contracts look to speedier resolutions as being more preferable. Arbitration bypasses the more deliberate pace of litigation in favor of a more efficient, less costly method of resolving business disputes. 

However, if legal precedent is an issue in your type of dispute, then the commercial litigation route may be more favorable. Consider that ongoing legal questions- ones that have been in dispute for an extended period of time- litigation can create a decision that helps provide clarity in future disputes of a similar nature. 

Large companies and insurers may benefit especially from litigation outcomes. Arbitration decisions do not carry with them any authority for influencing future arbiters. When consistency in outcomes matters in a variety of legal scenarios, then commercial litigation may be more favorable to your interests than arbitration. 

Questions regarding an arbitration clause in connection with a commercial dispute? Contact the Knox Law Group

Contact a NYC commercial litigation attorney who has experience in serving clients involved in business disputes. Arbitration clauses present challenges and opportunities for your business. Being aware of the costs and benefits of enforcing an agreement to arbitrate versus beginning litigation requires knowledge of your present dispute and different strategies. Your specific circumstances matter. Reach out to the Knox Law Group to learn how your situation can determine which direction your business should pursue.