When you have a legal dispute with someone, there are at least two procedures for resolving the dispute: File a lawsuit in the tax-payer funded court system or submit to binding arbitration.
My sense with the term “arbitration” is that people who don’t spend time working with the law, probably hear the term often but do not have a clear understanding of what it means and how it is different from a lawsuit in a court. The American Arbitration Association, one of the largest administrators of arbitration proceedings, defines arbitration as “the out-of-court resolution of a dispute between parties to a contract, decided by an impartial third party (the arbitrator)—is faster and more cost effective than litigation.”
Below is a table that highlights some of the basic differences between a “court case” and an “arbitration.” Both processes are used to resolve legal disputes between individuals and businesses.
| Court Case | Arbitration | |
| Who can find out about it | Public | Private |
| Who decides the winner | Jury or Judge | 1 or 3 arbitrators (usually attorneys) from a roster of neutral arbitrators |
| Selection of decision-maker | Jury selected or elected judge makes decision | parties select the arbitrator(s) |
| Where the case happens | County Courthouse | Private location arranged by the parties to the dispute |
| Length of the case | 8 months to 2 years | 5 months to 1 year |
| Punitive Damages | Maybe | Usually not available |
| Evidence allowed | Relevant evidence per evidence code | Limited evidence |
| How it gets started | File a Petition with the court | File demand for arbitration |
| Winner entitled to attorney fees? | Sometimes | Usually |
| Costs | court fees, attorney fees | fees for arbitrator(s), attorney fees |
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