A survey of in-house attorneys conducted in July and August of 2014 showed a split of opinion about whether arbitration generally turned out to be a better solution than litigation. 42 percent called it a toss-up, 25 percent said it was a better solution, and 21 percent said it was not.
The primary reasons given to arbitrate rather than litigate were: it was required by contract; it preserved confidentiality; it limited discovery; and it was less costly. Reasons given for choosing not to arbitrate included: the difficulty of appealing the decision; the arbitration process is not required to follow established legal rules; it limited discovery; and a lack of confidence in the neutrality of the arbitrator(s).
Other reasons cited to choose arbitration included: the chance to avoid unfavorable courts and runaway juries; the less formal setting; you can prohibit class actions; and cases are generally decided quicker. Other reasons not to arbitrate included: the panels tend to be quick, hear every argument, and in the end just “split the baby”; compromise verdicts instead of a defense verdict when the plaintiff fails to prove its case; and cost and time advantages may be illusory.
An interesting side note is that the American Arbitration Association commented on the results, and said that the perception arbitrators tend to “split the baby” with their verdicts is a myth. According to its studies of both domestic and foreign arbitrations, arbitrators have a clear tendency to either grant or deny the relief sought, either by all or nothing decisions, or by granting almost all of the relief sought.