Contract Law - About arbitration

What this page is about: Arbitration is a method of settling disputes between parties to a contract without having recourse to the courts. The clause in the contract which provides for arbitration is usually referred to by lawyers as "the Arbitration Agreement (Contract)". If there's no arbitration clause then, unless the parties otherwise agree, in the event of a dispute, either of them may start proceedings in the courts. This page looks at the arbitration process, generally.

Advantages and Disadvantages of Arbitration

Advantages include:-

Privacy/Flexibility of Procedure/Choice of Arbitrators.

Privacy - Arbitration is a private method of settling disputes. Unlike proceedings in Court, the general public are not admitted to hearings; none of the documents will become public, and there won't be any reporting of the outcome. Companies which are involved in high-tech and other sensitive contracts frequently require arbitration clauses so regarding avoid confidential data becoming the subject of public debate in the Court and/or matters of public record.

Flexibility of Procedure - There's scope for having the arbitration procedure tailored to the requirements of the parties.

For example, if a dispute can be resolved by having the arbitrator read documents presented to him by the parties, without any need for a hearing or examination of witnesses, then, by agreement, this is the way in which the arbitration will be run.

Court processes tend to be procedurally complex, and slow with a lot of time elapsing before a case comes to trial. With arbitration, at least in theory, the case can be dealt with quite quickly and at the pace of the parties (and the arbitrator) rather than at the pace of the public judicial system which is frequently overworked.

Choice of Arbitrators - The parties can themselves decide who is best qualified to hear the dispute. A case which goes to the Courts will be heard by a Judge - who will invariably be a lawyer. An arbitration dispute may, on the other hand, be heard by an engineer or some other person with specialist knowledge.

The arbitration clause in the contract ought to provide how the arbitrator is to be selected. If there's to be one arbitrator, then if the parties cannot agree, the clause should provide for some independent party - for example the International Chamber of Commerce - to nominate the arbitrator. If a specialist is required, then the appointing authority should be a relevant one -for example, the Institution of Civil Engineers if an engineer is to be arbitrator.

If there are to be three arbitrators, each party will usually appoint his own arbitrator and these two will select the third arbitrator to act as chairman of the Tribunal.

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Contract Law - About arbitration

Advantages and Disadvantages of Arbitration

Advantages include:-

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