Arbitration V. Litigation Pros And Cons: What Business Lawyers Need To Know

Originally published in Texas Bar Journal, October 2006

Many business lawyers — especially those who represent international clients — harbor deep-seated concerns with the American jury system as a forum for dispute resolution. Haunted by visions of runaway juries and misunderstandings of highly publicized verdicts such as the "McDonald’s Hot Coffee"¹ case, they routinely insist on arbitration as the dispute resolution mechanism in contracts for their clients. This article addresses some of the pros and cons of arbitration versus litigation.

Parties to international contracts in particular have legitimate concerns about the partiality of the local judiciary. However, before selecting arbitration as your dispute resolution mechanism, it is important to determine in what forum you are likely to land if disputes arise. As jurisdiction is determined by the circumstances of the particular case, parties will either be placed before a federal judge with a lifetime