Arbitration is resolving disputes using an independent neutral person to make a decision on the issues in dispute. Why use arbitration? Some of the reasons are:
- The use of an arbitrator enables the parties to have the benefit of an experienced professional to logically and thoroughly review their submissions and make a decision for them.
- An arbitration decision is final and binding.
- More focus on the issues and less on the personalities.
- A considerable amount of time may be saved in comparison to court proceedings.
- The proceeding and the decision are private.
- The parties jointly select the arbitrator to hear their dispute.
- Time to set up, hear and decide is usually a fraction of the time for court actions
- The costs of arbitration are usually less than litigation because of the speed in set up, hearing and awarding the decision.
- Parties may mutually set the rules to apply.
- Sometimes the parties prefer and obtain a non-binding decision, as a reality check in making their own settlement.
How does arbitration work?
- The parties choose an experienced arbitrator to hear their submissions and examine evidence in an informal setting. It is usual to obtain a biography and perhaps interview the proposed arbitrator. At this stage the arbitrator will not discuss any of the issues or evidence in dispute, and preferably will be interviewed at the same time by both parties to make the selection process transparent.
- The parties meet with the arbitrator and settle the procedures, times and fees in consultation with the arbitrator.
- Once these have been resolved, a written agreement is produced to clearly set out the scope and procedures of arbitration. Where a prior agreement establishes general procedures, only some details are added.
- A hearing is held on the issues.
- A written decision with reasons is given within the time agreed among the parties and the arbitrator, usually two to three weeks.
- The decision of the arbitrator will be binding and the decision may be entered as an enforceable court judgment.
- Arbitration is subject to the Arbitration Act and the rules of natural justice.
There are many variations that may be considered and applied to make an arbitration best suit the parties. This overview highlights some of the elements and steps that may apply in any arbitration. Click here for a general checklist.