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  • Writer's pictureWayne Gill

Courts Love Arbitration–You Should Too

In a recent post, we talked about Faithbased Alternative Issue Resolution as an alternative to courtroom litigation. Perhaps you're not quite ready for that route, but there are other means to avoid expensive and drawn-out litigation.

One of those methods is Arbitration and courts love it when parties choose or are bound to arbitrate legal matters. The reason why you should also love arbitration is that it can significantly limit your legal fees and damages.

In arbitration, there is limited discovery (exchanging of information), cases move quicker, and cases are not heard by a jury—all of which saves the parties time and attorneys’ fees. Arbitration is especially useful in defending frivolous cases, where running up attorneys’ fees and costs may be a party's main objective.

In the case of Banks v. Cashcall, Inc., a party who had made payments on a high-interest loan for over a year-and-a-half, filed a lawsuit alleging that the lender had violated a long list of laws, including the state Consumer Finance Act and others relative to unfair lending practices.

The lender filed a Motion to Compel Arbitration pursuant to the arbitration provision in the loan agreement. The suing party demanded its "day in court," arguing that the arbitration provision was unenforceable. The trial judge disagreed and ordered the parties out of court and into arbitration.

Arbitration agreements are generally covered by the Federal Arbitration Act so it can come into play in federal as well as in state proceedings. The case mentioned above occurred in federal court. In fact, there are cases which provide that the Federal Act was put in place to specifically reverse previous judicial hostility toward arbitration.

My, how times have changed.

Nowadays, most courts will require arbitration if there's even a slight reference to it in the parties' agreements. I had such a situation arise a few years ago. There were several agreements in dispute. One referred to arbitration. The court held that if one agreement mentioned arbitration, the entire case was subject to it.

The moral of the story is to read your contract and agreements carefully. Many of them contain arbitration clauses which may be favorable to your position. If you don't raise the availability to resolve the dispute out of court, the other side may not.

By not raising the issue, you could legally waive your right.

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