When you are at impasse with another party over a dispute – be it a simple real estate transaction or a complex international business deal – you have basically three legal ways to resolve it: mediation, arbitration, and litigation.
Litigation is the most familiar method, as it is the one most dramatized in film and on TV. But it can expose you to risks, such as heavy court costs and legal fees, as well as unfavorable publicity, given that court proceedings are almost always a matter of public record.
In many cases, mediation is the easiest, least painful method, as it involves a minimal amount of third-party intervention. You, the other party, and a mutually agreed-upon mediator will sit down – literally or virtually – and negotiate a settlement. The biggest drawback, of course, is that a mediated settlement is not legally binding; rather, it relies on the good faith of both parties to execute the terms of the settlement to full resolution.
Another common method is arbitration, in which an impartial third party hears from the disputing parties, together and/or individually, asks questions, considers evidence, deliberates, then makes a decision. That decision is legally binding, the violation of which can result in sanctions that can be enforced in a court. The advantage to arbitration is that – like mediation – the details of the case are kept confidential: It’s between you and your adversary and the arbitrator.
If you choose arbitration, ensure that the arbitrator is free of conflicts of interest in the case. The UK Supreme Court, in a ruling in Halliburton Co. v. Chubb Bermuda Insurance Ltd., recently underscored the importance of an arbitrator’s duty to disclose any conflicts or potential conflicts in every case. The court found that an arbitrator appointed by a London court in an insurance case over the 2010 Deepwater Horizon disaster breached his legal duty by failing to disclose to the plaintiff that he was also an arbitrator in another case related to the same event. The court ruled that failure to disclose can reasonably lead to doubts about the arbitrator’s impartiality. Transparency is key to preventing bias or the appearance of bias. Transparency leads to trust.
At Ehrenstein|Sager, we have a broad business practice, with significant experience representing clients in all manner of disputes, including international litigation and arbitration. We can help you understand the pros and cons of each type of dispute resolution method, and we are ready to guide you each step of the way. Get to know more about us on our website: https://ehrensteinsager.com/