Gavin Howe
Arbitration is a form of alternative dispute resolution, which is often included as a clause in contracts. It is a relatively inexpensive, brief, and confidential process, where a trained, professional, and neutral arbitrator acts as a judge to resolve a dispute. Arbitration clauses are frequently included in contracts to avoid lawsuits, and they bind the parties to a type of resolution outside the courts. The process is highly flexible, and the ground rules are open to negotiation. The arbitrator decides the rules, weighs the facts and arguments of both parties, and then decides the dispute. The decision of the arbitrator is final and easy to enforce, and courts usually refuse to overturn arbitrated decisions.
| Characteristics | Values |
|---|---|
| Definition | Arbitration is an alternative method of resolving legal disputes in which two parties present their individual sides of a complaint to an arbitrator or panel of arbitrators. |
| Participants | The participants in arbitration are the disputing parties and the arbitrator(s). |
| Arbitrator(s) | The arbitrator acts as a judge who will render a decision to end the dispute. Arbitrators are often retired judges, but they don't follow traditional legal procedures. |
| Agreement | Arbitration can only take place if both parties have agreed to it. This agreement is called an arbitration agreement. |
| Confidentiality | Arbitration is confidential, and the results are not public. |
| Cost | Arbitration is relatively inexpensive compared to a lawsuit. However, forced arbitration can be costly for consumers and employees. |
| Informality | Arbitration is a highly flexible process, and the ground rules are open to negotiation. |
| Appeal | The decision of the arbitral tribunal is final and easy to enforce. However, there are limited options for appeal. |
| Location | The parties can choose the venue of the arbitration. |
| Law | The parties can choose the applicable law. |
| Language | The parties can choose the language of the arbitration. |
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What You'll Learn
Arbitration agreements
Arbitration is an alternative method of resolving legal disputes between two parties outside of a courtroom. It is relatively inexpensive, brief, and confidential compared to a lawsuit. In arbitration, a trained, professional, and neutral arbitrator acts as a judge who will render a decision to end the dispute. Arbitrators are often retired judges, but they do not follow traditional legal procedures. Instead, arbitration is a highly flexible process whose ground rules are open to negotiation.
- "Any dispute arising from or in connection with this Contract shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC) for arbitration, which shall be conducted in accordance with the CIETAC's arbitration rules in effect at the time of applying for arbitration."
- "Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules as at present in force."
- "Any controversy or claim arising out of or relating to this contract, or the breach thereof, shall be determined by arbitration administered by the International Centre for Dispute Resolution in accordance with its International Arbitration Rules."
It is important to note that arbitration agreements are often included as fine print in lengthy standard contracts, and individuals may sign them without realizing it. Forced arbitration, where a company requires a consumer or employee to submit any dispute to binding arbitration, has been criticised for limiting consumer options and preventing employees from suing for discrimination, harassment, abuse, retaliation, or wrongful termination.
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Confidentiality
However, it is important to note that confidentiality in arbitration is not an inherent right. While arbitration proceedings are generally held behind closed doors, the onus to maintain confidentiality rests primarily on the arbitrators, and not necessarily on the parties involved. The extent of confidentiality can vary and is dependent on the arbitration rules agreed upon, the applicable state's arbitration laws, and any confidentiality provisions within the arbitration agreement.
To ensure confidentiality, parties should include explicit confidentiality clauses in their arbitration agreements. Additionally, they can select an arbitral institution with rules that impose confidentiality. Certain jurisdictions, such as the UK, imply a contractual duty of confidentiality even when it is not explicitly mentioned. However, this duty is not absolute and may be overridden in the public interest or to protect the interests of a party or justice.
In the United States, the rules of arbitral institutions vary in their approach to confidentiality. For example, the International Institute for Conflict Prevention and Resolution (CPR) and JAMS, both require that arbitration proceedings be kept confidential. Nevertheless, it is important to remember that even with confidentiality agreements in place, courts may still require access to certain information, and the right of public access to court proceedings can supersede confidentiality agreements.
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$106
Advantages and disadvantages
Arbitration is an alternative method of resolving legal disputes where the two parties present their individual sides of a complaint to a third-party neutral arbitrator or panel of arbitrators. The arbitrator decides the rules, weighs the facts and arguments of both parties, and decides the dispute. Arbitration is relatively inexpensive, quick, and flexible compared to a lawsuit. It is also a private process that is easy to enforce and allows for creative rulings.
However, arbitration can also be more expensive than court proceedings, with quality arbitrators demanding substantial fees. It can also be unpredictable as it does not necessarily follow the formal rules of procedure and evidence that are involved in a courtroom trial. Arbitration also eliminates juries, which may be important to some to help prevent biases and unfairness.
Another disadvantage is that arbitration agreements are often buried in the fine print of lengthy standard contracts, meaning people often sign them without realising. This is particularly problematic for one-shot players, often individual consumers, who have little experience with arbitration and may lack the experience and resources necessary to mount a strong case.
Furthermore, arbitration clauses often work in favour of large employers or manufacturers when challenged by an employee or consumer who does not understand how arbitration works. The process of choosing an arbitrator is also not always objective, and there are cases where the arbitrator could be biased due to a business relationship with one party.
Overall, while arbitration can be a quicker and more flexible alternative to court proceedings, there are also several disadvantages to consider, including the potential for high costs, unpredictability, and bias.
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Legal orders and exclusions
Arbitration is an alternative method of resolving legal disputes in which two parties present their individual sides of a complaint to an arbitrator or panel of arbitrators. It is relatively inexpensive, brief, and confidential. The courts usually refuse to overturn arbitrated decisions and can step in to ensure they are enforced. This means that arbitrations lead to final outcomes that allow parties to move forward, while also avoiding the public scrutiny that can accompany a court trial.
Arbitration agreements are commonplace, and individuals may have signed them when they started their job or purchased a product or service. However, arbitration clauses often appear in the "fine print" of lengthy standard contracts, and people often sign them without realising.
In arbitration, a trained, professional, and neutral arbitrator acts as a judge who will render a decision to end the dispute. Arbitrators are often retired judges, but they do not follow traditional legal procedures. Instead, arbitration is a highly flexible process whose ground rules are open to negotiation. The parties can select a sole arbitrator together or choose to have a three-member arbitral tribunal, with each party appointing one arbitrator, and those two people then agreeing on the presiding arbitrator. The parties can also choose the applicable law, language, and venue of the arbitration.
The arbitrator decides the rules, weighs the facts and arguments of both parties, and decides the dispute. The arbitrator may grant any remedy or relief that is just and equitable and within the scope of the parties' agreement. This includes specific performance of a contract or any other equitable or legal remedy. The arbitrator may also make interim or partial rulings, orders, and awards, including injunctive relief and measures for the protection or conservation of property and disposition of disposable goods.
In the context of international arbitration, tribunals have a duty to resolve disputes, observe due process, conduct the procedure efficiently and effectively, act with impartiality and independence, and render an award that is enforceable and not subject to being set aside. Tribunals have discretion over the inclusion and exclusion of evidence, which should be exercised fairly and efficiently. Evidence that is introduced late and subsequently excluded by the tribunals would typically not amount to a breach of due process, and tribunals are not required to afford a party indefinite opportunities to respond.
In forced arbitration, a company requires a consumer or employee to submit any dispute that may arise to binding arbitration as a condition of employment or buying a product or service. The employee or consumer is required to waive their right to sue, to participate in a class-action lawsuit, or to appeal. Forced arbitration is being written into more and more terms of agreement and contracts, and it severely limits consumer options for resolving disputes. Arbitration is also increasingly used in employment disputes, although this was not always the case. Until the 1990s, arbitration in employment was almost exclusively a feature of unionized workplaces, where it was used to enforce the provisions of collective-bargaining agreements.
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International arbitration laws
Arbitration is a legal process for resolving disputes without going to court. It is often a cheaper, quicker, and more confidential alternative to litigation. In arbitration, a neutral third party, or arbitrator, acts as a judge and makes a binding decision to settle the dispute. Arbitration agreements are usually written into contracts in advance of any dispute, and both parties must agree to arbitration.
- Interstate arbitration: This involves disputes between nations, represented by their governments, which are resolved through arbitration.
- Investor-state arbitration: This involves disputes between nations and private foreign investors, such as foreign nationals or companies. Investor-state arbitration arose from bilateral and multilateral investment treaties, in which nations agreed to commit to treating foreign investors fairly and to enforce mechanisms for resolving disputes.
- Commercial arbitration: This involves disputes between businesses from different countries, which prefer to use international arbitration to avoid potential biases in national courts and due to the greater expertise of international tribunals in international business practices.
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Frequently asked questions
Arbitration is an alternative method of resolving legal disputes between two parties outside of a courtroom. The disputing parties present their individual sides of a complaint to a neutral arbitrator or panel of arbitrators. The arbitrator decides the rules, weighs the facts and arguments of both parties, and decides the dispute.
An arbitration agreement is a contract between two parties that outlines the terms of the arbitration process in the event of a dispute. Arbitration agreements are typically included in commercial contracts to outline how disputes relating to that contract are to be resolved.
An arbitration clause is a clause in a contract that requires the parties to resolve their disputes through an arbitration process. Arbitration clauses are often included in standard contracts as "fine print".
Forced arbitration is when a company requires a consumer or employee to submit any dispute that may arise to binding arbitration as a condition of employment or buying a product or service. The consumer or employee is required to waive their right to sue, to participate in a class-action lawsuit, or to appeal.
Arbitration is relatively inexpensive, brief, and confidential. It allows for more creative rulings than civil courts and the decisions are final and easy to enforce.
