Court vs. Arbitration: The Case for Each, and Neither

The arbitrator then conducts a relatively informal hearing. People often sit around a conference table at the local office of the arbitration association or in the arbitrator's office.

Once the arbitrator issues an opinion, it generally is binding on all sides. Case law is very clear that mandatory, binding arbitration will rarely be overruled by the courts. Courts will overturn the decision only if it was arbitrary or capricious.

I used to be a strong advocate of arbitration. Over the years, I have changed my mind.

For one thing, I used to think that arbitration was less expensive than litigation. However, several years ago, Public Citizen, a public-interest nonprofit organization, issued a report indicating that arbitration may be more expensive for consumers and employees than using the courts.

For example, arbitration may cost each participant several hundred dollars just to start the process; filing a suit in D.C. Superior Court costs you only $120.

Additionally, Public Citizen found, "arbitration saddles claimants with a plethora of extra fees that they would not be charged if they went to court."

But my concerns go beyond cost. In court, there are due-process protections afforded both sides that may not be available with arbitration. The rules of evidence -- no matter how archaic they may seem -- exclude certain information that has no place in court. For example, hearsay evidence, whereby one person testifies about what someone else said, is generally not admissible in court.

In an arbitration proceeding, however, the arbitrator usually admits all evidence from both sides. The rules are lax, and the arbitrator makes the call.

Another drawback is that the arbitrator is not required to file a written opinion. Often the arbitrator provides a one-paragraph decision, awarding money to one side or the other. The losing party should be entitled to know why he or she lost, but in the absence of a written explanation, parties can be confused and upset.

In a court, all of the parties in the litigation usually understand the rationale behind the judge's opinion -- whether or not they agree with the final order. The judge will either give an opinion from the bench with a lengthy explanation or write a comprehensive decision to accompany the court order.

Finally, one of the hallmarks of our legal system is the right to appeal a lower court's decision. Judges are human and can make mistakes. The appeals process gives the losing party another bite at the apple. The appellate court will not overrule the trial court's determination of facts but will carefully analyze the facts as they relate to legal principles.

Clearly, there is merit to arbitration in many instances. If a dispute is in the range of $5,000 to $20,000, it may not pay to spend the same amount of money in litigation.

Often, small-claims courts are the best means to resolve small disputes. You should check the amount for the small-claims court in the county or the city where you live.

In Maryland, Virginia and the District, small-claims court is available for disputes of $5,000 or less. Your claim is for $9,000. If you are willing to reduce your claim to $5,000, you do not need a lawyer to file in small-claims court. Often, the mere filing of the suit will spur the other side to try to reach a settlement.

Benny L. Kass is a Washington lawyer. For a free copy of the booklet "A Guide to Settlement on Your New Home," send a self-addressed stamped envelope to Benny L. Kass, 1050 17th St. NW, Suite 1100, Washington, D.C. 20036. Readers may also send questions to him at that address or contact him through his Web site, http://www.kmklawyers.com.