The dispute resolution clause is usually negotiated last and least. A short analysis at drafting is worth a great deal later.
Arbitration advantages. Privacy; a decision-maker with subject-matter expertise; limited discovery and therefore lower cost in many cases; finality, with very narrow review; and for cross-border contracts, far more reliable enforcement of awards than of judgments.
Arbitration disadvantages. Limited review means an erroneous award stands; fees for arbitrators and institutions are substantial and front-loaded; joinder of related parties requires consent; and there is no dispositive motion culture in some settings, so weak claims may proceed to hearing.
Court advantages. Dispositive motions, appellate review, established procedure, subpoena power over third parties, and no forum fees.
Court disadvantages. Public record, generalist judges, broad discovery cost, delay, and jury risk in the wrong venue.
Middle paths. Arbitration with an agreed discovery protocol and an express provision for dispositive motions; a carve-out permitting court applications for injunctive relief; mediation as a condition precedent; and small-claims carve- outs.
The drafting failures to avoid. Clauses that are optional and therefore disputed; inconsistent clauses across related agreements in the same transaction; and reference to an institution or rules that do not exist.