How does a class action lawsuit differ from a class action arbitration?

A class action lawsuit is a legal action in which a group of people having a common cause of action (such as being injured by a defective product) combine forces to pursue a civil lawsuit as a group. A class action can be brought in federal or state court. Class action arbitration, on the other hand, is an alternative dispute resolution option in which two parties agree to resolve their differences in front of a neutral third-party arbitrator, which is often chosen and paid for by an arbitration firm. In an arbitration, a hearing takes place before a decision is made. Unlike a court of law, the decision in an arbitration does not set a legal precedent that can be used in future cases. Class action lawsuits and class action arbitrations also differ in the manner in which the compensation is distributed. In a class action lawsuit, the court determines how much money will be distributed to the group and also divides the award among members. In an arbitration, the arbitrator will decide what kind of award the individuals will receive and how much each will receive. The legal process for filing a class action lawsuit in Arkansas is different from the process for filing a class action arbitration. In Arkansas, a class action lawsuit must be filed in court and approved by a judge. In contrast, an arbitration is initiated when the parties sign an arbitration agreement or a settlement agreement.

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