“Control your own destiny, or someone else will.” Jack Welch’s eight simple words of advice provide a compelling rationale for mediation as the optimal form of dispute resolution. As a former general counsel, my overwhelming preference was always to retain maximum control over outcomes via a mediation process. But what if parties are unable to find common ground and resolve their disputes? Does one maintain more control over the outcome with arbitration or litigation? Aaron Foldenauer, in his July 29 article in Corporate Counsel, makes the argument that arbitration creates big risks for companies and is “problematic for risk-averse corporations.” He also questions the oft-articulated advantages of arbitration—that it is cheaper, faster and more predictable than litigation—and concludes that corporations may be mistaken in mandating arbitration in contracts.
Foldenauer arrives at the wrong conclusion because he is condemning arbitration as a process based on its misuse or abuse. Of course, the same can be said of litigation and its misuse and abuse. In fact, to properly evaluate arbitration versus litigation one has to consider how the process performs when it is used properly—and the extent to which that can be controlled by the parties. Indeed, proponents of arbitration cite its ability to enable parties to arrive at a reasoned decision, based on applicable law, in a manner that is swifter, less costly and less disruptive than litigation. Of course, the same can be said of litigation. Litigation works well when it works well. Those who are of the same mind as Foldenauer contend that arbitration can be, and often is, more time-consuming and costly, and sometimes results in capricious and unappealable decisions that would not have occurred had the case been tried in court.
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