The COVID-19 Pandemic has abated but its impact has forever changed New Jersey’s legal landscape. “Zoom” court hearings, virtual meetings and remote work have become commonplace. These efficiencies have yet to solve the riddle of whether to litigate a claim in the court system or engage in some type of alternative dispute resolution such as mediation or arbitration. This quick FAQ addresses some basic questions many of our clients have in relation to the differences between litigation and the primary alternative method to resolve disputes: arbitration.
Q: Is there a fundamental difference between litigation and arbitration?
A: Yes.
Litigation involves resolving disputes in the state court system with a judge or jury acting as the “factfinder.” In contrast, arbitration employs either a single neutral arbitrator or panel of arbitrators chosen and paid for by the parties. In the event that the parties cannot agree on an arbitrator(s), the arbitration association managing the dispute will choose.
Q: Do I have the option of electing arbitration to resolve my dispute?
A: Only if an agreement between the parties identifies arbitration as an option.
Arbitration can be chosen as a dispute resolution method when both parties, as outlined in a contract or agreement, agree to submit their dispute to arbitration rather than pursuing litigation. If the parties stipulated to submit their dispute to arbitration, the result of the arbitration is binding.
Importantly, for arbitration to be binding, both parties must have consented to the arbitrator’s jurisdiction. Absent an agreement to arbitrate—whether in the contract giving rise to the dispute or a subsequent agreement to arbitrate in lieu of litigation, arbitration is generally non-binding.
Q: Are arbitration proceedings confidential?
A: Yes.
Unlike state court litigation which is publicly filed, absent exceptional circumstances, Arbitration is almost always private and confidential under the arbitration association’s rules, and likely the parties’ contract. Arbitration awards also generally remain private unless a party seeks to enforce the award post-hearing in the court system. Thus, arbitration generally provides a higher level of confidentiality and privacy for the parties.
Q: Is arbitration more efficient than litigation?
A: Typically, yes.
Arbitration is often faster than litigation. Parties are compelled to agree to a discovery schedule and choose experienced arbitrators who manage the process. The discovery process in a litigation takes longer due to crowded court dockets, less active case management by judges, and numerous pre-trial procedures. Thus, arbitration is usually a faster process from initial filing to resolution.
Q: Is arbitration more expensive than litigation?
A: Typically, no.
In any dispute the cost is directly related to its complexity. Arbitration is usually more cost-effective because the arbitration manager will “push” things along. This is especially true for less complex disputes where parties can control expenses by choosing a single arbitrator and streamlining procedures.
It should be noted that the retention of an arbitrator is an additional cost. In the court system, a party does not have to pay the judge or the jury to act as “factfinder.” In arbitration, the parties split the cost of the arbitrator(s), who bill hourly.
Q: Is an arbitration decision appealable?
A: No.
In binding arbitration, decisions are final and binding, with limited grounds for appeal, providing quicker resolution and more certainty.
Q: How qualified are arbitrators?
A: Very.
Although judges have a wide range of legal expertise, they may not be familiar with the specific industry or subject matter of the dispute.
In arbitration, arbitrators will be experts in the relevant field (e.g., construction, private equity, partnership/shareholder dispute familiarity). This expertise can lead to more informed and industry-specific decisions.
Q: Are arbitration awards enforceable?
A: Yes.
After an arbitrator determines an award, a party can seek to enforce it in the court system. This procedure is straightforward but can vary depending on the jurisdiction.
For more information, contact Sean Rose: or 908-964-2460.
