Why Can One Party Hold Out For A Court Error?

There are a few different reasons that one party may try to hold out for a court proceeding instead of agreeing to arbitration. One of the primary reasons of this occurring involves the financial situation of one of the involved parties (Allison, 1990). Depending on the perception of the strength of the case, a financially desperate party may either decide to agree to arbitration or hold out for litigation. A party that is struggling financially and views their case as strong may be willing to hold out for a larger potential payoff in the event of litigation. A party that is struggling financially that views the other party’s argument as strong may also prefer the lengthy time involved in litigation as it may delay a potential ruling that further strains resources (Allison, 1990).

An argument could be made regarding the potential advantage that the party with better resources may hold in arbitration decisions. If one party feels disadvantaged and believes the arbitration process will be unfair, they are much more likely to hold out until the case can be heard in court (Allison, 2007). It is understandable that individuals may feel disadvantaged in an arbitration decision when compared to a better-resourced party. Colvin and Gough (2015) found that organizations with prior interactions with assigned arbitrators did tend to do better in decisions when compared to those decisions involving two parties with no previous arbitration experience. The reasoning behind this phenomena could be that arbitrators want repeat business or it could be related to the ability of the organization to correct potential issues in processes between arbitration events. Regardless, individuals without legal representation tend to do less well on average than do parties with legal representation (Colvin & Gough,