There are many contracts between businesses which provide for arbitration, in the event of a dispute between the parties.

Traditionally, arbitration has been sold as a relatively inexpensive and easy way to settle a legal dispute. Tradition is not always right.

In most lawsuits, each side is responsible for their own attorney’s fees. However, it is relatively inexpensive to start a lawsuit. In addition, the parties can try a case with a judge, who is paid by the State or Federal government.

Compare that situation with arbitration. Typically, there is a filing fee to institute arbitration, which is much higher than a court filing fee. In addition, there will be hearing fees, which will include the cost of an arbitrator or several arbitrators. Therein lies the cost. The parties not only have to pay their own attorney, but also have to pay for the arbitrators who can each cost $300 per hour.

I have seen situations where an arbitration has taken several weeks of hearings, costing thousands of dollars. A party to a lawsuit will not be faced with thousands of dollars in hearing fees for a court trial.

Parties to a commercial contract must be very careful when placing a mandatory arbitration clause in a contract. Arbitration costs have the potential to cost thousands of dollars prior to a final decision on the merits of a claim.

If you are involved in a business dispute, please feel free to contact

Attorney Robert M. Singer
2572 Whitney Avenue
Hamden, CT 06518

serving New Haven County and all of Connecticut

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