Arbitration vs. litigation;

              38 HASKINS & SELLS May
AR E C E N T edition of a New York
newspaper carried the story of an
interesting litigation which has been before
the courts for many years. The case in­volves
the title to a valuable parcel of real
estate located in New York City. Accord­ing
to the story, as reported in the news­paper,
there have been no less than twenty-two
actions and appeals in the suit, tried
by courts of all degrees, ranging from the
municipal courts of the City of New York
to the Supreme Court of the United States.
The original parties to the suit have been
dead for many years, but their heirs still
carry on. The present reappearance of
the matter is due to a motion to revive the
question of the summary proceedings de­cided
against the plaintiff thirty-four years
ago. It is interesting to speculate on the
probable costs which already have been
sustained in this lawsuit; and to wonder
if a point will not soon be reached where
the costs will exceed the principal involved
at the beginning.
Quite probably this is an exceptional
case. However, litigations spread out over
a period of years, involving numerous
actions and appeals and pyramided costs,
are reported so frequently as to prove
that they are by no means as scarce as the
proverbial hen's teeth. The resulting waste
of time, effort, and money is apparent.
To avoid situations of this character,
application of the principle of arbitration
to many business disputes is being widely
advocated and successfully effected.
Arbitration may be defined as a legally
recognized method of settling differences
between business men without ordinary
litigation. Decisions are obtained by the
submission of facts to one or more arbitra­tors,
whose award is binding and legally
enforceable.
The laws of most of the states for many
years have contained provisions recognizing
the principle of commercial arbitration in
one form or another. In most cases, how­ever,
these laws have had limited applica­tion,
and have precluded the fullest realiza­tion
of all the possibilities of arbitration.
Several of the states have enacted com­prehensive
modern arbitration laws within
the past few years. Legislation is pending
in other states. A Federal arbitration act
went into effect on January 1, 1926, relating
to "maritime transactions" and "com­merce
among the several States or with
foreign countries." The Federal act, as
well as the newer state laws, makes valid,
irrevocable, and enforceable, a written pro­vision
in a contract to arbitrate any dispute
that later may arise thereunder, as well as
a written agreement to arbitrate an existing
controversy. Agreements to submit dis-
Arbitration vs. Litigation