Arbitration is where a private judge (or a panel of private judges) called an arbitrator makes a usually binding decision for the parties. Micronomics performed a study comparing AAA Arbitration to Litigation in federal court and here is what they found:
- Arbitrations are heard about 12 months quicker than federal district court (11.6 months v. 24.2 months)
- Add another 11 months to resolution if the court case is appealed (11.6 months v. 33.6 months) — arbitrations can only be appealed on very narrow grounds
- Because parties cannot use the funds at dispute until it is resolved, $180 million per month is constrained (over the entire US). That number jumps to $330 million per month when appeals are factored in.
Arbitration is not for everyone, but certainly should be considered when appropriate.