As a business owner, you want to stay out of the courtroom as much as possible. Litigating can lead to a number of difficult issues, including managing the expense of litigation and potentially losing business relationships. Sometimes litigation is necessary, but it is best to avoid it.
Arbitration is one way to manage disputes with various entities without needing to step into an actual court of law. You can arbitrate rather than litigate anything, so long as everybody agrees to arbitrate, as per FindLaw.
How does arbitration work?
Arbitrations can take many different forms, and the actual rules of arbitration also differ between circumstances. One of the big advantages of arbitrating is this inherent flexibility: you can customize the process to your particular situation. However, the majority of arbitrations involve either a single arbitrator or a panel of arbitrators reviewing the evidence the parties put before them and then the arbitrator(s) make a decision based on the evidence.
Arbitration can be either binding or non-binding, legally. If the arbitration is non-binding, it is still possible for the matter to end up in court.
What are the advantages?
Arbitration is often much faster and more affordable than traditional litigation. Another advantage of arbitration is that you and the other party decide on who the arbitrators are. This means that you can end up with a subject matter expert rather than a general judge making the ultimate decision on the dispute.
Additionally, while litigation is a matter of public record, arbitration typically is not. Many of the rules associated with an arbitration process are also much more streamlined and much less bureaucratic as compared to the traditional court.