It is common for managers and entrepreneurs to wonder whether an arbitration clause should be included in all contracts.
In practice, the answer depends on the characteristics of each transaction and the risks involved.
Although both paths are legally valid, there are relevant differences that may impact how potential disputes are handled. Below are some points typically considered in this analysis, bearing in mind that only disposable patrimonial rights may be resolved through arbitration:
1. The decision-maker
In the judiciary, the case will be decided by a judge with a broad scope of work, handling different types of disputes. In arbitration, there is the possibility of selecting arbitrators with specific expertise in the subject matter of the contract, which may be particularly relevant in more technical matters.
2. Time to resolution
Judicial proceedings may last for years, depending on the complexity and the number of instances involved. Arbitration, on the other hand, generally follows a more defined timeline, which may contribute to greater predictability.
3. Confidentiality
As a general rule, judicial proceedings are public. In arbitration, it is common for proceedings to be conducted confidentially, which may be important in certain business contexts.
4. Costs involved
Access to the judiciary usually involves lower initial costs. Arbitration, on the other hand, entails its own expenses (such as arbitrators’ and institutional fees), which must be assessed in light of the contract’s complexity and objectives. Each case requires careful analysis, considering not only cost, but also risks, the nature of the transaction, and the parties’ objectives.
In the event of a dispute, your contract should be prepared for the most appropriate resolution path!
