Arbitration refers to the process whereby the two parties who signed a contract table disputes that arose between them to an unbiased third party for resolution. Arbitration is based on the consensus of the disagreeing parties to arbitrate. The contract the two signed contains a binding clause of arbitration that obliges them to give in to arbitration. Alternatively, the two may decide through the way of Submission Agreement to arbitrate their disagreements as they arise. Without arbitration, the disputing parties will be forced to resolve the disputes through litigation. The latter is an inefficient, unwieldy and expensive process that can be avoided if the two decide to arbitrate.
Advantages of arbitration
Arbitration is different from judicial proceedings in that, proceedings in arbitration happen in private. This confidentiality is important especially when it comes to disagreements that are related to matters that are commercially sensitive. In most instances, the individuals involved prefer to leave matters of such a nature from the public domain.
The arbitrator who is chosen to oversee the process is selected based on the technical expertise, qualifications, and specialization that comes with the knowledge that tackles the subject matter of the disagreement. Since the arbitrator is an expert in arbitration, time and funds are not wasted on trying to make her or him understand. A popular institution may also be given the work of choosing a suitable arbitrator.
Autonomy of both parties
The parties may maintain some control over solving the dispute. They can decide on the route to take on all procedural and evidential matters of the arbitration proceedings. By actively participating in how the proceedings are managed, the parties are able to save funds and time spent in the resolution of the disputes.
Finality nature of the award
The arbitrator makes awards that are considered final and therefore binding. This can only be disputed in particular limited circumstances. However, in an instance where a party feels that an erroneous award was made, the absence of a real right of appeal may be unpopular.
Administration of awards
It is easier to execute an arbitration award in jurisdictions separate from a court order. This is due to its appealing nature in international commercial disputes. Arbitration has grown in popularity and prevalence. However, it is still necessary to seek the opinion of a lawyer when it comes to finding out the type of dispute resolution that is best suited to said circumstances