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Is arbitration always best for business disputes?

Business disputes can easily disrupt daily operations, but many business owners in Georgia still prioritize staying out of court. While there are certainly benefits to using alternative dispute resolution options like arbitration — including saving time and money — they are not always the best choice. Here are a few reasons why one might want to reconsider mandatory arbitration clauses. 

Is arbitration binding? 

During arbitration, a neutral third party called the arbitrator will listen to both sides and come to a decision. However, overturning the arbitrator’s decision can be extremely difficult. This means that going into arbitration without a solid case can be a bit of a gamble and may leave you with few options. 

This is not to say that arbitration awards or decisions never end up in court. Those who are not pleased with the outcome or believe that it does not line up with the facts of the case can proceed to court in an attempt to remedy the situation. These are a few reasons why one might go to court in regard to an arbitrator’s decision, including to: 

  • Appeal the decision in appropriate circumstances 
  • Affirm the remedy 
  • Enforce the award 

Fewer protections 

There are also fewer protections in arbitration than when going to court. For example, one does not have the right to an accurate and complete record of everything prior to arbitration, which is generally available prior to court. Everyone’s spoken words are not recorded during arbitration, either. While this might be ideal for someone who values privacy, this lack of recorded evidence could prove problematic when challenging a decision. 

None of this is to say that arbitration is not a useful process, as it can be quite effective when used in the right situations. The problem sometimes lies in arbitration clauses that require arbitration. Georgia business owners who are eager to handle their disputes in the best manner possible may want to review their contracts and consider making updates that would streamline their processes for handling disputes.