During project execution, a dispute arises between the owner and contractor regarding interpretation of contract specifications. The contract requires disputes to be resolved through binding arbitration. What is the primary advantage of arbitration over litigation?
Correct Answer
C) Arbitration is typically faster and less expensive than court proceedings
Arbitration is generally faster, less formal, and less expensive than traditional litigation, though decisions are typically final.
Why This Is the Correct Answer
Arbitration's primary advantage is efficiency — it is typically faster (resolves in months vs. years) and less expensive (no lengthy discovery, no jury fees, streamlined hearings) than court litigation. This is why AIA and other standard contract forms default to arbitration for construction disputes.
Why the Other Options Are Wrong
Option A: Arbitration allows for jury trials
Arbitration explicitly excludes jury trials. One of the defining characteristics of arbitration is that disputes are decided by a neutral arbitrator or panel, not a jury of peers. Parties who want a jury trial must pursue litigation instead.
Option B: Arbitration proceedings are always open to the public
Arbitration proceedings are generally private and confidential, not open to the public. This confidentiality is actually considered an advantage by many parties, but the statement as written is factually incorrect.
Option D: Arbitration decisions can be appealed to higher courts
Binding arbitration decisions are final and very difficult to appeal — this is a feature (finality), not a limitation, for most parties seeking resolution. Appeals are possible only on narrow grounds such as arbitrator fraud or misconduct, not simply disagreement with the outcome.
Memory Technique
Remember the three F's of Arbitration: Fast, Final, and Frugal (cost-effective). When you see 'advantage of arbitration,' always gravitate toward speed and cost savings.
More NASCLA Questions
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