California business owners like you want to protect your business. This means avoiding disputes wherever possible. But sometimes, you cannot avoid a dispute. When that happens, what do you do? You must use tools to solve your dispute.
Litigation and arbitration are two of these tools. Each one offers different benefits. What you decide to use will depend on what you want out of your resolution.
The Balance looks at litigation and arbitration as dispute resolution methods. Litigation is what people are often referring to when they talk about “taking things to court”. In this process, you and the other parties present your case to a judge. Based on the information provided, the judge will hand down a decision. This decision is legally binding. This allows you for stability. It is good if you do not believe the other parties will uphold their end of things without court order. But the process is lengthy and expensive. It also tends to leave bad feelings between companies.
Arbitration is like a milder form of litigation. It involves presenting your case to an arbitrator. This person still hands down a legally binding decision. But you do not have to take the case to court. It is not overseen by a judge. This means your private business is not publicized. It also means there is a little more wiggle room for you and the other parties. You can work together to reach agreements that are mutually beneficial to all. This helps preserve business relations. This is one of the most important parts of running a business.