Answer to Question 1
The advantages of arbitration include using an impartial third party who often has expertise in the field to settle the dispute. The parties may have selected the arbitrator in advance or may have set forth a procedure to select a mutually agreeable arbitrator. Arbitration allows both sides to keep secret information that would have to be divulged in a court case. In most cases, use of an arbitrator will allow the case to be resolved much more quickly than utilizing traditional litigation techniques and it will probably be less expensive.
A disadvantage to arbitration is that the parties may be barred from using the court system. After the arbitrator's ruling, the court cannot correct a mistake of law made by the arbitrator. An arbitrator may issue a binding decision without giving reasons for the decision. Parties in arbitration give up many rights litigants retain, such as discovery and class action.
Answer to Question 2
Pablo could bring this case in the federal court system because he and Dick are residents of different states and there is more than 75,000 in dispute. This is a diversity case. Filing in federal court is optional, however, so Pablo could alternatively bring this action in a state system.
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