There are both pros and cons to agreeing to arbitrate future disputes. Pros include the ability to negotiate the terms of the arbitration agreement to expedite proceedings, limit expansive discovery, ensure confidentiality, define the scope of what can be the subject of the dispute (e.g., no class action claims), specify the applicable rules and location where the dispute will be resolved, and even specify the qualifications of the arbitrator(s) who will decide the dispute.
Potential cons include the fact that commonly used arbitration services require substantial filing fees, as well as other charges by the arbitration service for administrative expenses and the time spent on the matter by the arbitrator(s), decisions are typically not appealable, compulsory mechanisms for obtaining discovery may be more limited or unavailable, and traditional rules for the admission and consideration of evidence are often relaxed.
Depending upon the facts and the nature of the dispute, a party’s views regarding which of the considerations above are “pros” and which are “cons” can change. Accordingly, there is no one size fits all advice in response to the question of whether arbitration or traditional litigation is a preferable mechanism of dispute resolution.