To Arbitrate or Litigate? Recent Arbitration Data Is Worth a Look

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Commercial arbitration is not right for every case, but recent AAA statistics make a practical for using it in the right one.

Are you considering whether or not you should include an arbitration clause in you next contract? 
Are you skeptical of arbitration because you think it may cost too much or take too long?

A recent article provided by the American Arbitration Association collects useful new statistics on that should he consider whether to propose or agree to arbitration in your next contract.

This Article Looks Only at Commercial Matters

Here I will highlight only the statistics for commercial arbitration, that is, business disputes between commercial parties. I’ll leave consumer and construction matters to others to consider, although the piece covers those, too.

The commercial data covers a broad range of industries, including healthcare, legal services, financial services, commercial insurance, energy, technology, transportation, franchise, hospitality, intellectual property and licensing, life sciences, mergers and acquisitions, joint ventures, professional services, partnership and shareholder disputes, accounting, sports, and entertainment.

Speed

The most promising statistic is speed. AAA reports that, for B2B awarded cases closed in 2025 with claims over $1 million, the median time to award was 18.7 months. The comparison point for federal court litigation is about 34 months to trial.

That’s a pretty big difference. Still, it does not mean arbitration is right for every commercial case. Some disputes need public adjudication, broad third-party discovery, immediate court remedies, or appellate review more than speed. But for many business disputes, what the parties need most is a final answer within a commercially useful time. They aren’t looking to pay to litigate obscure legal or procedural issues to a final appellate decision. For most business disputes, 18.7 months to award makes a lot more sense than three years to reach trial.

Settlement

AAA reports that 52 percent of B2B cases closed in 2025 settled before award. That suggests that a well-managed arbitration can create a route to resolution because the schedule is set, discovery is usually narrower and faster, and the hearing date provides a deadline for resolution. This can help parties evaluate risk and settle before paying full cost of a hearing on the merits.

Of course, court cases also provide a deadline to settle. But the deadlines typically come later — and so do the settlements.

Expense

Cost is usually the first objection to arbitration. Parties pay the arbitrator and administrative fees. They don’t have to pay judges. Their taxes already do that.

But, according to the article, when parties in multimillion-dollar disputes proceed to award, only approximately 9 percent of their costs are for arbitrator compensation and administrative fees. The arbitrator’s fees are indeed expenses of the dispute. But the major expense in most substantial commercial disputes is usually lawyer time for pleadings, discovery, motion practice, experts, preparation, and hearing or trial time.

That is where arbitration can save money if done right. Control of motion practice, and an efficient hearing can substantially reduce the expense of resolving the dispute. To be sure, arbitration can be expensive. But court is generally more expensive.

‍ ‍Industry Experience

‍ ‍Companies often select commercial arbitration because a decision-maker with relevant experience can often resolve the dispute in a more informed  way. A patent or technology licensing dispute, an insurance coverage dispute, a professional services dispute, or a post-closing M&A dispute are better understood by a decision-maker who familiar with the commercial setting.

‍ ‍So, for more complex or technical disputes, party participation in selecting the decision-maker is one of arbitration’s practical advantages.

‍ ‍But remember this. . .

‍ ‍Arbitration is not a cure-all. A skilled arbitrator, a focused clause, and fair procedure are all required to fully realize advantages of arbitration.

‍ ‍Still, the new statistics suggest that, in the right cases, arbitration provides a faster, less expensive alternative to litigation in crowded courts.

‍ ‍Sources

‍ ‍AAA Commercial Dispute Resolution statistics and industry descriptions: AAA Commercial Dispute Resolution

WSJ Custom Content / AAA sponsored article: The Power of Resolution