• Model contract clauses and agreements
• Resolving a dispute
  • Litigation
  • Arbitration
  • Consensual Methods
  • Other 'Alternative' Dispute Resolution Methods
• Finding a dispute resolver

Arbitration

Arbitration is a formal process similar to litigation but where the hearing is in private in front of a nominated third party, the arbitrator, who makes a binding decision. The arbitrator is not a court judge but rather an industry-specific expert or otherwise a well-qualified individual who both parties agree is suitable for resolving their dispute.

Arbitration is a legally based process that involves much of the procedure and type of argument that occurs in a court trial. However, arbitration is private. Like a court trial, it is concerned much more with fair treatment of the parties involved than achieving a precise legal agreement.

Advantages of arbitration:

• The parties can choose who is to be their arbitrator and this means they can choose a person with the particular expertise involved in their dispute
• The arbitral process is private and confidential to the parties and the arbitrator
• An arbitration may be held anywhere that is convenient, at any suitable time.
• Arbitration is flexible. Its procedure can be tailored to a particular dispute to make the best use of time whilst still ensuring a proper consideration of the matters in dispute
• Parties are usually free to choose whoever they wish to be their case for them
• An arbitrator's award can be enforced over all other dispute resolution methods (except litigation and arbitration) just like a court judgment, provided it followed from a properly written arbitration agreement. Furthermore, it can be enforced in another country, if that country is one of 140 that have adopted the 1958 New York Convention on the Recognition and Enforcement of Foreign Awards.

Disadvantages of arbitration:

• Arbitration can be costly if the parties select a very eminent arbitrator and engage expensive lawyers or other professionals to assist their case
• The procedure and process used in an arbitral process can be complex
• It is possible to appeal an arbitrator's decision, so delaying finality, particularly if the dispute relates to an important point of law
• Legal aid is generally not available for arbitration
  

Arbitration is the preferred final method for resolving commercial disputes if:

1. the parties want privacy
2. they do not share the same legal jurisdiction
3. the nature of the dispute is specialised
4. one or both parties want swift resolution of the dispute

Last Updated: 28 March 2009