Arbitration — a procedure of resolving jurisdictional disputes between entities where they resolve the dispute via a neutral third party. Parties resort to arbitration when they have to do this according to state law or the contractual agreement obligates them to do that. The contract’s arbitration clause indicates the situations where parties need to resolve the disputes by arbitration.
Advantages of Arbitration:
- The procedure of arbitration is much more simple than the court hearings, and it is much more informal.
- The process of arbitration goes faster than the court hearings because it doesn't depend on the working hours of the public bodies.
- Arbitration is carried out without the attendance of witnesses.
- Generally, the decision of the arbitrator is final, and the parties have no right to appeal to the court.
- The conduct of the arbitration process is cheaper than the court hearings because the participants don't have to pay for the lawsuit.
- Arbitration isn’t a public process in contrast to the judicial hearing.
Difference between Arbitration and mediation
The process of arbitration may be confused with mediation. However, these procedures have several differences.
A mediator doesn’t resolve the dispute. He helps the parties to find the decision that will satisfy them both. A successful mediation results in an agreement signed by the parties and there is no such thing as a winning or losing party.
An arbitrator acts like a judge, he examines the case based on the evidence and law of arbitration. The result of the arbitration has to be enforced like a court order. And as in the court, the award is made in favor of one party.
The parties start the process of arbitration by mutual agreement. If necessary, they add a relevant clause to the contract or sign a submission agreement.
Then, the parties choose the arbitrator. They may address a special juridical entity or hire an independent expert for arbitration. If there have to be three arbitrators, each party selects one and the arbitration institution selects the third arbitrator who will act as a chair.
The next step is to determine the issues and timetable of the arbitration hearing. The issues can be related to fact, law, or quantum. Each party draws up the written submissions. The submissions include the necessary documents and the expert evaluations, if necessary.
Arbitration involves one or several hearings. They can assist in the hearings themselves or hire an attorney. The duration of hearings depends on the issue. After the hearings, the arbitrators produce the award. This award resolves the issue and determines the further actions of the parties.
The arbitration award can be appealed in the agreement or government procedures allow it. A tribunal’s decision can rarely be challenged, but in some cases, parties can go to court. It happens, when the arbitration process wasn’t conducted properly.