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Myth or Reality – Can Arbitrations be More Efficient and Cost Effective than the Courts

By Herb Silber, Q.C. (posts)

Introduction

One of the reasons often given as to why parties to an agreement build in a reference to Arbitration is because doing so will result in a more timely and less costly process then they would face if they went to Court. They are prepared to give up certain levers available in a Court process because they crave efficiency and cost savings. But as more and more parties resort to Arbitration, they are often surprised and disappointed to find that their “craving” is not only unsatisfied, but arguably the opposite occurs.

 

Some experienced commentators have offered the opinion that resorting to arbitration to achieve speed of resolution or cost savings can be a fool’s errand. Rather, the appeal of an arbitration should be seen in such benefits as its confidentiality, the ability to secure a person with expertise to evaluate the case and the preservation of ongoing relationships.

 

While these are all noble objectives, I do not believe that it is a hopeless task to expect efficiency and cost savings by resorting to Arbitration, but the path needs to be carefully thought out to achieve that result at the following stages:

  1. At the time the arbitration clause is inserted in an agreement
  2. Once the dispute arises
  3. At the stage the dispute is being arbitrated.

In successive articles I will examine in turn strategies to consider at each of these three stages to try to achieve the desired result of efficiency of process and the cost savings accompanying those efficiencies.

 

 

 

 

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