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www.marinelink.com 25 that arbitration had provided an unsatis- fying result when a client was not able to fi le an early motion to fully dismiss a frivolous claim, as it would have in court.

The salient point is this: arbitration may be less expensive than courtroom litigation, but that will depend on the specifi c arbitration procedures to which the parties might agree, contrasted against those that would be employed by the judicial alternative. Focusing on this issue at the outset is therefore criti- cal.

How important is a quick result?

Most federal and state court dockets are congested, and thus the ability to ob- tain a speedy resolution can be a signifi - cant advantage of arbitration. In fact, some arbitration agreements require the arbitrators to resolve matters within short deadlines, and many arbitrators consciously meet that expectation.

That said, arbitrations can proceed just as slowly as courtroom litigation when the issues are particularly complex, when the parties are numerous and/or dispersed, and when the parties have agreed to court-like pretrial procedures.

Furthermore, litigation in some courts (such as the aforementioned “Rocket

Docket”) may proceed more quickly than arbitration because the judges in those courts will brook no delays and grant no extensions (except in the most unusual of circumstances).

Thus, when expediency is an issue, careful attention must be paid to forum selection.

How will the dispute be resolved?

One oft-overlooked distinction be- tween arbitration and litigation is the basis for the outcome. In litigation the judge is constrained to rule based on the law, as set forth in statutes, regula- tions, procedural rules and prior judicial decisions. But arbitrators have greater fl exibility; they may consider the same statutes, regulations, rules and prior de- cisions, but they also have discretion to consider evidence that would be ex- cluded in a courtroom, and to reach a decision they perceive to be fair, even if it is not fully consistent with a strict application of the law. While this may work to your advantage in some cases, it may generate substantial uncertainty.

Are you waiving the right to an ap- peal? Judges make mistakes and when they do, they are subject to appeal. That procedural safeguard can provide criti- cal value. In contrast, the grounds upon which an arbitrator’s decision may be appealed are more limited.

Unless you think the “basis for deci- sion” factor weighs heavily in favor of proceeding in court, remember that ar- bitration avoids the risk of a “runaway jury” and it minimizes exposure to un- warranted punitive damages.

Is the dispute likely to involve an ongoing relationship?

Another frequently overlooked issue is whether a dispute is likely to involve an ongoing business relationship. In such cases, arbitration can provide an intangible benefi t because the process can be less formal and involve fewer op- portunities for adverse encounters (e.g., depositions), which lends itself to being more collegial and less adversarial than courtroom litigation. This is not always the case, of course, but when the parties are likely to continue doing business to- gether arbitration may be more condu- cive to maintaining that relationship.

The questions posed here are not ex- haustive, nor are the thoughts offered in response. They should, however, dem- onstrate the complexity of an issue often overlooked in contract negotiation and the importance of addressing that issue head-on.

The Author

Alan M. Freeman is a partner in the

Washington, D.C. offi ce of Blank Rome

LLP. His business litigation and legal risk reduction practice is national in scope. t: 202-772-5925 e: [email protected]

Although arbitration may be preferred by maritime industry operators in some contexts, this does not mean that it offers the best solution in all contexts.

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