Final answer:
Arbitration is often preferred when the contract stipulates U.S. law and one of the litigants is foreign because it is a faster and more cost-effective alternative to litigation. It also ensures a fair and impartial resolution and allows for the protection of confidential information.
Step-by-step explanation:
Arbitration is often preferred when the contract stipulates U.S. law and one of the litigants is foreign because it is a faster and more cost-effective alternative to litigation. In arbitration, the parties agree to have their dispute resolved by an arbitrator instead of going to court. This process is typically quicker and less expensive than traditional litigation.
In addition to being faster and more cost-effective, arbitration also provides a way to ensure a fair and impartial resolution to the dispute. The arbitrator, who acts as a neutral third party, makes a final decision based on the evidence and arguments presented by both sides. This helps to avoid potential bias that may arise in foreign courts.
Furthermore, arbitration can be used as a way to protect confidential information. Unlike litigation, which involves public court proceedings, arbitration is a private process where the parties can keep the details of their dispute confidential. This may be particularly important in cases where sensitive business information or trade secrets are involved.