Judicial Reference vs. arbitration

legal dispute resolution in commercial real estate transactions
Businessman being mediator between conflict or arguing co-worker in office.

Whether a commercial real estate purchase or lease agreement, many industrial buyers/sellers and landlords/tenants choose arbitration and thus waive their rights to have the dispute litigated in a court or jury trial. Many believe arbitration saves time and money in the dispute resolution. However, in recent years a new avenue of dispute resolution has grown in use: judicial reference. However, this option has not been incorporation into the AIRCRE standard purchase contract or lease agreement yet. It would have to be added to the addendum. See below excerpt from a law firm for more insight. 


Comparing the overall comparative benefits however, judicial reference has a few significant advantages over arbitration.  For one, while arbitration is – except in very limited cases of egregious instances of fraud or arbitrator misconduct – binding on the parties, while judicial reference affords the parties complete appellate rights.  That right of appeal, tied to the referee’s obligation to follow the rules of evidence (as opposed to an arbitrator’s limited obligation to do the same and the arbitrator’s proclivity to consider almost any evidence presented at the arbitration) renders a judicial reference a more secure and predictable dispute resolution option than arbitration.  These factors alone may warrant the inclusion of a judicial reference clause as the alternative dispute provision in a contract of any consequence.

The only clear disadvantage to a judicial referee compared to an arbitration proceeding is that judicial reference proceedings must be public, while arbitration is usually a private affair, taking place at a private facility not open to the public with and, oftentimes, with no public record.  Arbitration awards, even if confirmed by the Superior Court, are much more likely to be sealed and kept private which is often an important consideration in employment or intellectual property disputes.

from Cohen Durrett LLP

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