Pros and Cons of Litigation vs. Arbitration

By: Hussein Moujalled

This article will focus on the pros and cons of litigation and arbitration as dispute resolution methods in construction related disputes. Dispute resolution is the process of resolving differences or disagreements between parties through a variety of methods that may be utilized to achieve that goal, the most renowned of which is civil litigation.

The exact process of civil litigation is invariably dependent on the unique laws of the locale and the governing law mandated in the contract. If a dispute arises between an employer and a contractor, either may raise a court action in an attempt to resolve the dispute. However, there are several glaring faults when it comes to litigation of construction disputes. Litigation cases are overseen by a judge that may or may not have experience with the particular industry related to the case. As such, in complex cases the judge’s experience may fall short and this presents a problem when it comes to complicated technical disputes, where judges usually rely on the opinion of a court-appointed expert. This problem is then exacerbated by the time-consuming process and the public relations nightmare attached to litigation cases. This myriad of flaws instills employers and contractors with a reluctance to allow litigation cases to be considered a viable avenue of dispute resolution when negotiating construction contracts. As a result, many employers have decided to enforce mandatory arbitration clauses in construction contracts.

In contrast, arbitration as a method of dispute resolution may or may not be more arduous than litigation. Generally, arbitration is the preferred method for various reasons, such as the time required, the confidentiality, as well as the finality of the awards, owing to the fact that arbitration awards are final, binding, and not subject to appeal. The lack of appeal speeds up the dispute resolution process significantly in comparison to litigation where judgements can be appealed numerous times before a final judgement is given. Though, it bears noting that the time required for the arbitration process varies greatly depending on the complexity of the case. Complex arbitration cases may take an excessively protracted time, would cost much more than litigation, and some parties may wish to annul the award due to some perceived error from the appointed arbitrators. Nevertheless, the most appealing aspect of arbitration in lieu of litigation is the experience of the arbitrators relevant to the industry or specific case. In litigation cases it is entirely possible for a judge with no relevant experience to be appointed to the case. While in arbitration cases there are generally three arbitrators appointed to a tribunal; the employer chooses one, the contractor chooses another, and the third is chosen by both of the arbitrators. This may vary from contract to contract.

Given these disparate methods and the apparent benefits of arbitration in lieu of litigation, organizations have endeavored to supplement the workforce with professionals well versed in arbitration. Pioneer IPMC offers services in both technical support during litigation and arbitration representation and has augmented its workforce to incorporate numerous professionals well versed in law and arbitration, such as Fellow (FCIArb), Member (MCIArb), Associate (ACIArb) members of the CIArb, MScs. in construction law and dispute resolution, MScs. in construction law and arbitration, and BScs. in law, in order to expand the invariable experience of its workforce and specialize in dispute resolution in the United Arab Emirates.

September 2nd, 2020

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