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THE ADVANTAGES AND DISADVANTAGES OF ARBITRATION
AS COMPARED TO LITIGATION
By

Arthur Mazirow, Esq., CRE
Real Estate Arbitrator, Mediator,
Expert Witness and Consultant
Los Angeles, California
Website: Mazirow.com

Presented to The Counselors of Real Estate
April 13, 2008
Chicago, Ilinois

796608.1
© 2008 Arthur Mazirow

796608.1
© 2008 Arthur Mazirow

The Advantages and Disadvantages of Arbitration
As Compared to Litigation
By
Arthur Mazirow, Esq., CRE
Los Angeles, California

1.

ADVANTAGES OF ARBITRATION
1.1

The following are said to be advantages of arbitration over court litigation: A.

Speedier resolution; however, there can be exceptions due to multiple parties, arbitrators, lawyers and litigation strategy.

B.

Less costly; however, there can be exceptions due to multiple parties, lawyers, arbitrators and litigation strategy.

C.

Exclusionary rules of evidence don’t apply; everything can come into evidence so long as relevant and non-cumulative.

D.

Not a public hearing; there is no public record of the proceedings. Confidentiality is required of the arbitrator and by agreement the whole dispute and the resolution of it can be subject to confidentiality imposed on the parties, their experts and attorneys by so providing in the arbitration agreement.

E.

From defense point of view, there is less exposure to punitive damages and run away juries;

F.

A party may record a lis pendens even if there if an arbitration pending by filing a law suit and then holding the case in abeyance until the arbitration is resolved.

G.

The ability to get arbitrators who have arbitrator process expertise and specific subject matter expertise.

H.

Limited discovery because it is controlled by what the parties have agreed upon and it is all controlled by the arbitrator.

I.

Often, the arbitration process is less adversarial than litigation which helps to maintain business relationships between the parties.

J.

The arbitration is more informal than litigation.

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© 2008 Arthur Mazirow

1

K.

2.

The finality of the arbitration award and the fact that normally there is no right of appeal to the courts to change the award.

DISADVANTAGES OF ARBITRATION

2.1
arbitration:

The following have often been said to constitute the disadvantages of

A.

There is no right of appeal even if the arbitrator makes a mistake of fact or law. However, there are some limitations on that rule, the exact limitations are difficult to define, except in general terms, and are fact driven.

B.

There is no right of discovery unless the arbitration agreement so provides or the parties stipulate to allow discovery or the arbitrator permits discovery.

C.

The arbitration process may not be fast and it may not be inexpensive, particularly when there is a panel of arbitrators.

D.

Unknown bias and competency of the arbitrator unless the arbitration agreement set up the qualifications or the organization that administers the arbitration, has pre-qualified the arbitrator.

E.

There is no jury and from the claimant’s point of view that may be a serious drawback.

F.

An arbitrator may make an award based upon broad principles of “justice” and “equity” and not necessarily on rules of law or evidence.

G.

An arbitration award cannot be the basis of a claim for malicious prosecution.

H.

Except in certain circumstances, non-signatories of the arbitration agreement cannot be compelled to arbitrate. (An arbitration clause in a lease ban be enforced against an assignee or sublesee in

possession and also be enforced by such persons. Kelly v. Tri Cities Broadcasting (1983) 147 CA 3d 666; Melchor Investment Co. v. Rolm Systems (1992) 3 CA 4th 587.)

I.

The possibility of compromise or splitting of baby awards.

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© 2008 Arthur Mazirow

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3.

THE ADVANTAGES OF A LAWSUIT OVER ARBITRATION

3.1
When the advantages and...
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