Arbitration, mediation and litigation sound like they hail from the same family, but they’re very different.
Arbitration is a private forum that the parties have agreed to use to decide a dispute. An arbitrator’s decision is typically binding. Overturning an arbitration award is usually very difficult. A party considering arbitration should realize that an arbitration award is usually final.
Generally, in arbitration the evidentiary rules are relaxed. This means that what you believe is unreliable evidence might be considered. Likewise, the conduct of attorneys is not as strictly regulated, which may permit arguments, rumor and innuendo to be raised that you’d never hear in a courtroom. (Both of these circumstances may favor or hurt your position. But it is important to know that it’s something you’ll possibly experience in arbitration.)
Another consideration is that the arbitrators may be known and have involvement in the industry. This may be good since someone who’s from “round the way” may better understand the issues. Still, there are probably good arguments against allowing someone who is already known to rule on your maritime dispute. You may prefer someone without industry knowledge.
With a lawsuit, the appellate process forces a trial court to explain its reasoning. In not finding your witnesses credible and disagreeing with your law, the trial judge’s decision will likely give a party some understanding as to where the claim got off the rails and may sometimes provide an appeal. This is not always the case with arbitration. I’ve seen arbitrators regurgitate each party’s arguments at length while only providing a short statement on how the award was actually reached. Without a meaningful basis to appeal and no detailed explanation for a loss, this can be very frustrating.
Arbitration is championed because it’s supposedly quicker and cheaper than the judicial process. Arbitration will always be good for certain claims. But before you elect to pursue arbitration over trial court, sit down with your admiralty attorney and talk about its pros and cons.