Due to COVID-19, most courts across the country (both state and federal) are closed. In Massachusetts, the courts have remained open only for emergency matters.
Unfortunately litigation does not just stop. Business owners and individuals still have disputes that need to be resolved. Some contracts contain binding arbitration clauses that require both parties to arbitrate their respective claims. Even if your agreements do not contain such a clause, you may want to consider arbitrating your claims. Before the courts closed in response to COVID-19, a lawsuit filed in Massachusetts Superior Court could take at least three years to reach trial. That time will likely extend even further due to COVID-19. Arbitration offers an attractive alternative both to business owners and to individuals who want to resolve their disputes more quickly. Set forth below are the advantages and disadvantages of arbitration:
- Arbitration lacks the formality of a court proceeding. Arbitration lacks the formality of court proceedings. There is no judge sitting on a bench in a black robe. The time standards are not prescribed by the court but rather are agreed to by the participants in the arbitration. There is much less motion practice in arbitrations and a jury trial is obviously not an option.
- Arbitrations take less time. Traditionally, arbitrations conclude within a year. The main reason for this is because the parties to the arbitration privately compensate the chosen arbitrator. In addition, the goal of arbitration is to swiftly resolve disputes, not to follow a strict court schedule. Moreover, arbitration largely eliminates the appeals process. An unhappy litigate can appeal an arbitrator’s decision only on very limited grounds:
- Where the award was procured by corruption, fraud, or undue means;
- Where there was evident partiality or corruption in the arbitrators, or either of them;
- Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; or
- Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made (M.G.L. c. 253, § 12).
- Discovery. One of the most costly items in litigation is discovery. The purpose of discovery is simple: to obtain factual information that supports the basis for the asserted claims. The type of discovery permissible in a given arbitration may be governed by the parties’ contract, or by the particular forum or arbitration rules the parties may have selected in which to resolve their dispute… For example, most claims involving investment advisors and broker-dealer firms are required to be submitted to the Financial Industry Regulatory Authority (“FINRA”). FINRA has sought to simplify the discovery process WCFDOCS\7100\0000\1375948.v1-6/26/20 by publishing a discovery guide, which sets forth a list of documents that each side should exchange. The American Arbitration Association (“AAA”) also has specific rules (“protocols”) for commercial disputes and employment related disputes. Of course, at the outset of an arbitration, the parties can also agree on the type of discovery they want to have in a particular case and the arbitrator will usually issue an order that summarizes the agreement of the parties.
In a court proceeding, discovery is governed by the particular state’s rules of civil procedure. In Massachusetts, as in other states, the civil procedure rules allow parties to obtain answers to written questions or “interrogatories,” and request the production of documents. In addition, unlike arbitration, the civil procedure rules allow parties to take depositions. Although depositions are not common in arbitrations and are not expressly prohibited, the trend is toward allowing a limited number of depositions that will assist the parties in the efficient resolution of the issues in dispute. If the dispute requires expert testimony, to the extent possible, it is advisable for the parties to work together to keep the costs of expert discovery down. The parties should agree to a timetable for the exchange of an expert report or other disclosures and depositions if necessary.
- Cost. Arbitrations are less expensive than litigating a case in court. The goal of arbitration is to resolve a dispute quickly. The costs of an arbitration are limited to money spent on discovery, expert witnesses (if necessary), the cost of the arbitrator and attorney’s fees. In theory, arbitrations are not a long drawn out process like court proceedings. Claims can usually be adjudicated in less than a year’s time. As previously mentioned above, court cases can last several years. Given the shortened schedule, the cost of an arbitration should be substantially less saving both parties’ time and money.
- Arbitrator/Judge. One of the most important aspects of any case is the ultimate trier of fact. In the state courts of Massachusetts and many other jurisdictions, judges rotate throughout the court system every few months. Moreover, the judge is assigned to a particular session where cases are to be heard. Over the life of a case, several judges will have touched the matter and will have made several decisions regarding discovery, pre-trial motions, and various other issues that may arise. In contrast, the parties to an arbitration have the opportunity to pick the arbitrator or arbitrators who will hear the case. The parties have an opportunity to choose one or more arbitrators who have a particular expertise in the subject matter of the dispute. All issues from start to finish are decided by the same chosen arbitrator(s). Not only does this allow the arbitrator(s) to gain a familiarity with the subject matter but also the parties and their respective advocates. Additionally, havingthe same decision maker throughout the case is more efficient and saves the parties the expense of explaining the history of the case to a new judge every few months. Lastly, while the applicable state laws, cases, and the rules of evidence govern judge’s decisions, arbitrators are less constrained. The rules of evidence do not apply. Arbitrators also tend to exercise wide discretion as to what evidence they deem to be relevant in a proceeding and generally allow the parties to present their case without any formal time constraints.
What is the proper forum to resolve your dispute? If you are concerned about costs, want your dispute resolved quickly, and desire a more flexible process, we would suggest arbitration as WCFDOCS\7100\0000\1375948.v1-6/26/20 a viable alternative to court. The attorneys and Wilchins Cosentino & Novins LLP routinely handle arbitrations across a wide spectrum of issues including breach of contract, breach of fiduciary duty, negligence, professional malpractice, construction and real estate related matters. Please feel free to contact us at 781-235-5500 or email@example.com.