LITIGATE OR ARBITRATE?

You are the chief executive of a corporation that manufactures or uses technical or engineered products and systems.  You have become embroiled in a dispute with a supplier or customer about some deficiency, quality control, lateness, patent or other typical business problem.

You have heard the horror stories about how long a court case could take and the attendant costs.  Maybe you are getting advice from other principals in the company who think that your case is strong, and that "we should go to the mat on this one."

Then you realize that even if you win your case, it's not necessarily over.  Either you or your opponent can appeal any decision, thereby dragging out the case for who knows how long.  Meanwhile, the costs and aggravation will continue.

Fortunately, one of your executives is familiar with arbitration and suggests that might be a good way to resolve the dispute with some finality, and with arbitrators who have some knowledge about the technical fields involved.

Maybe you're lucky and you already have a standard arbitration clause in your contract with all your business partners.  In that case, you can call for arbitration and set the process in motion.

But even if there is no existing arbitration clause (and if not, that's something that you should incorporate into future contracts), then you could always discuss that possibility with the other party.  Since it will be in both your interests to gain the advantages of arbitration, it might not be a hard negotiation. 

But there is one thing that is very important in keeping the costs of an arbitration less than a litigation, and that is the the rules that apply.  More on this in a future posting.