Arbitration
Arbitration is a method of resolving disputes outside of court where a neutral third party, the arbitrator, hears both sides and makes a legally binding decision called an award. It is a form of alternative dispute resolution (ADR) often used for commercial, employment, and international disputes, and is sometimes quicker and less expensive than litigation.
Key aspects of arbitration
Process:
Parties involved in a dispute present their arguments and evidence to an impartial arbitrator. The arbitrator reviews the information and makes a decision.
Binding decision:
The arbitrator’s decision, known as an award, is legally binding and difficult to challenge in court.
Impartiality:
The arbitrator acts as a neutral third party, making a decision based on the evidence presented rather than taking sides.
Types:
Ad hoc arbitration:
Parties agree on their own rules for the process.
Administered arbitration:
The process is managed under the rules of an arbitral organization, such as the International Chamber of Commerce (ICC).
Applications:
Arbitration is used in a wide variety of disputes, including international commercial contracts, investor claims against states, and employment matters.
Benefits:
It can be a more cost-effective and efficient alternative to formal court proceedings.
Legal framework:
In England and Wales, the Arbitration Act 1996 provides a legal framework for arbitration.