Arbitration proceedings can be an excellent way for businesses to resolve their disputes and often the private and secret nature of arbitration is appealing to businesses. Businesses throughout San Diego, California and the rest of the nation rely on various forms of arbitration to resolve business disputes every single day. However, because arbitration tends to be relatively independent of normal court proceedings, it sometimes breeds controversy as to the fairness of the process. Recently, for example, a panel from a federal appeals court decided that a secret arbitration forum, which helps resolve business disputes, was unconstitutional.

While there was sufficient consensus to support the ruling, the panel of the federal appeals court was not in unanimous agreement on the decisions, which was ruled on 2 to 1. One judge in favor of the decisions pointed to the secret nature of the court. She said that she was in strong favor of giving access to details pertaining to the arbitration proceedings, due to the benefits that would come from it.

The one disagreeing judge issued an opinion in support of the secret arbitration forum, saying that the form was an excellent way for companies to resolve business disputes in privacy. She said that the forum represented the perfect model of the commercial arbitration process. In spite of this one judge’s disagreement, this ruling could be a sign of a continued shift in thinking with regard to arbitration.

As more businesses include mandatory clauses in contracts to require that business disputes be resolved through arbitration, some observers suggest that arbitration is not always the most fair and equitable way to resolve these disputes. In California and elsewhere, it is beneficial to a business when it can settle disagreements out of court or prior to arbitration. However, when it is necessary to litigate, legal strategies can be employed on behalf of a business or individual to ensure that important rights are preserved and that the facts are presented in a favorable light.

Source: Star Tribune, Federal appeals court upholds ruling rejecting secret business court arbitration in Delaware, Randall Chase, Oct. 23, 2013