By Steven M. Katzman
By the time most business owners think seriously about arbitration, the choice has already been made for them. It was made years earlier, in a dispute resolution clause on the last page of a contract nobody negotiated, and it now controls where the fight happens, who decides it, what evidence you can gather, and whether you can appeal a bad result. After decades of trying commercial cases in both courtrooms and conference rooms, I can tell you that neither forum is “better.” Each is better for certain disputes, and the businesses that come out ahead are the ones that chose deliberately, at signing, instead of discovering their forum after the relationship collapsed.
A word of caution before anything else: if a dispute has already erupted, do not assume you know your forum until a lawyer has read every agreement in the relationship. Arbitration clauses hide in purchase orders, terms and conditions, operating agreements, employment agreements, and incorporated rules, and Florida and federal law strongly favor enforcing them. Just as important, you can waive arbitration by litigating first, and you can undermine a court case by ignoring a valid arbitration demand. The first strategic decision in any commercial dispute is forum, and it is easy to get wrong in the first two weeks.
This article explains how arbitration actually differs from litigation in Florida, where each forum tends to help or hurt, and how to draft, or renegotiate, the clause that decides everything.
The legal framework: two statutes favoring arbitration
Arbitration exists only by agreement; no one can force you into it unless you consented, usually in a contract. Once you have agreed, two statutes make that agreement difficult to escape:
- The Federal Arbitration Act (9 U.S.C. § 1 et seq.) governs contracts involving interstate commerce, which covers most commercial agreements of any size, and requires courts to enforce arbitration agreements according to their terms.
- The Revised Florida Arbitration Code, Fla. Stat. Chapter 682, governs the rest and largely mirrors the federal approach: courts compel arbitration of covered disputes, stay parallel litigation, and confirm awards into enforceable judgments.
The practical consequence: challenges to arbitration clauses usually fail. Courts resolve doubts about scope in favor of arbitration, and broad clauses covering claims “arising out of or relating to” the contract sweep in tort claims, fraud claims, and statutory claims alongside breach of contract. If you signed it, expect to live with it.
Where arbitration earns its reputation
- Privacy. Court filings are public records; competitors, customers, and reporters can read your complaint the day it is filed. Arbitration proceedings are private, and with a confidentiality agreement they stay that way. For disputes involving trade secrets, sensitive financials, or reputational risk, this is often the deciding factor.
- Expertise of the decision-maker. In circuit court, a judge with a crowded docket, or six jurors, decides your construction defect or securities case. In arbitration you help select the decision-maker, and you can require one with relevant industry or subject-matter experience. For technical disputes, an arbitrator who understands the industry can be worth more than every other advantage combined.
- Speed and finality. A complex commercial case in a busy Florida circuit can take years to reach trial, and appeals add more. Arbitration typically resolves faster, and because review of awards is so limited, the result is genuinely final. A business that needs the dispute over, so it can move on, often values finality above everything.
- Procedural flexibility. The parties can shape discovery limits, hearing format, and schedule, rather than defaulting to the full weight of the rules of civil procedure.
Where litigation earns its keep
- The right to appeal. This is the sharpest difference. A trial court’s legal errors can be corrected on appeal. An arbitrator’s cannot: under Fla. Stat. § 682.13 and the FAA, an award can be vacated only on narrow grounds like corruption, evident partiality, or the arbitrator exceeding their powers. An arbitrator who simply gets the law wrong is, in almost every case, beyond correction. In a high-stakes dispute, giving up appellate review is a real price.
- Full discovery. Fraud, fiduciary breach, and concealment cases are won with documents and depositions. Litigation gives you subpoena power over third parties and broad discovery rights; arbitration discovery is leaner and third-party evidence can be hard to reach. When you expect the other side to hide the ball, the courthouse is built for that fight.
- Dispositive motions and injunctions. Courts can end weak claims on summary judgment and enter emergency injunctions with teeth, backed by contempt power. Arbitrators grant these remedies less readily, and enforcement still runs through a court. (Florida law does let a court grant provisional remedies in aid of arbitration under Fla. Stat. § 682.031, a tool many parties overlook.)
- Cost, sometimes. The conventional wisdom that arbitration is cheaper is only sometimes true. In court, the judge is free; in arbitration, you pay filing and administrative fees plus the hourly rates of one or three arbitrators, which in a large case can run well into six figures. A streamlined single-arbitrator case is usually cheaper than litigation; a three-arbitrator panel in a document-heavy dispute may not be.
How to think about the choice
There is no universal answer, but after years on both sides of this question, a few patterns hold up:
- Choose arbitration when confidentiality matters, when disputes will be technical, when the relationship is ongoing and worth preserving, when you face repeat disputes of modest size, or when speed and finality are worth more than the right to appeal.
- Choose litigation when you anticipate fraud or concealment that demands full discovery, when the stakes are large enough that appellate review is essential protection, when you may need emergency injunctive relief, or when public accountability is itself leverage.
- Consider hybrids. Well-drafted agreements often carve out injunctive relief so either party can go to court to stop irreparable harm (critical for non-compete and trade secret protection), send small disputes to fast-track arbitration while preserving court for large ones, or require mediation first, which resolves a remarkable share of commercial disputes at a fraction of the cost of either forum.
The clause is the whole ballgame: drafting points
If arbitration is right for your contracts, do not settle for a one-sentence clause. The details determine whether arbitration delivers its advantages:
- Scope. “Arising out of or relating to this agreement” captures related tort and statutory claims; narrower language invites parallel proceedings in two forums at once.
- Rules and administrator. Name the rules (for example, AAA Commercial Rules) so there is no fight about procedure before the fight about the merits.
- Number of arbitrators. One arbitrator is faster and cheaper; three reduces the risk of an aberrant award. Match the panel to the likely stakes, or scale it by amount in dispute.
- Seat and governing law. Fix the hearing location and the law that applies, or you may litigate those questions first.
- Discovery limits. Say what document exchange and depositions are allowed. Silence means the arbitrator decides, and by then one side will want everything and the other nothing.
- Attorney’s fees. Florida follows the American rule, in which each side bears its own fees absent a statute or contract provision. If you want the prevailing party made whole, the clause must say so.
- Carve-outs. Preserve court access for emergency injunctive relief and, where appropriate, for collections, evictions, or IP enforcement.
The worst clause is the one nobody read. We routinely review dispute resolution provisions as part of our business transactions practice, because an hour of drafting attention at signing is worth months of forum fights later.
Frequently asked questions
Can I get out of an arbitration clause I signed? Rarely. Under the FAA and Chapter 682, Florida courts enforce arbitration agreements unless you can show a contract defense like fraud in obtaining the clause itself, unconscionability, or waiver. Assume the clause will be enforced and plan strategy accordingly.
Can the other side waive arbitration? Yes. A party that actively litigates a dispute, filing claims, taking discovery, engaging the court on the merits, can waive its right to compel arbitration. If your opponent sued you in court despite an arbitration clause, raise the clause immediately or you may waive it too.
Is an arbitration award enforceable like a judgment? Yes. A prevailing party petitions the court to confirm the award under Fla. Stat. § 682.12 or the FAA, and the confirmed award becomes a judgment enforceable through the usual collection tools.
Can I appeal an arbitration award in Florida? Almost never on the merits. Vacatur under Fla. Stat. § 682.13 is limited to grounds like corruption, evident partiality, arbitrator misconduct, or exceeding powers. Legal or factual error is not enough. This finality is arbitration’s greatest strength and its greatest risk.
Is arbitration always confidential? The proceeding is private, but privacy is not automatic confidentiality. If secrecy matters, build a confidentiality obligation into the arbitration clause or a stipulated order in the proceeding, and remember that a court action to confirm or vacate the award creates a public record.
What does arbitration cost? Filing and administrative fees scale with the amount in dispute, and the parties pay the arbitrators’ hourly rates or per diems. A single-arbitrator case is usually economical; a three-member panel in a complex case can cost more than the courthouse alternative. Budget for the forum you chose.
Talk to a Florida business litigation attorney
Forum strategy is not a formality; it is often the first decision that determines how a commercial dispute ends. The attorneys at KWBR have tried and arbitrated business disputes across Florida for decades through our complex commercial litigation and arbitration practices, and we counsel clients on dispute resolution provisions before they sign. Whether you are drafting the clause, facing a demand, or deciding where to file, contact us for a confidential consultation before the forum chooses you.
This article is for general informational purposes and is not legal advice. Every dispute turns on its specific facts and contract language; consult a qualified Florida attorney about your situation.