What is Arbitration?

Arbitration

Quick Answer

A method of resolving disputes outside of court, arbitration involves a neutral third party who makes a binding decision. It is often faster and less formal than traditional legal proceedings.

Overview

Arbitration is a process where two parties in a dispute agree to submit their case to a neutral third party, known as an arbitrator. The arbitrator listens to both sides, reviews evidence, and then makes a decision that is usually binding. This means that the parties must follow the arbitrator's decision, similar to a court ruling, but the process is often quicker and less formal than going to court. The way arbitration works typically involves the parties selecting an arbitrator or a panel of arbitrators to hear their case. They may also agree on specific rules and procedures for the arbitration process. For example, in a contract dispute between two businesses, they might choose arbitration to resolve their differences instead of going through a lengthy court trial, saving both time and money. Arbitration matters because it provides an alternative to the court system, which can be slow and costly. It is particularly useful in civil law contexts, where parties seek to resolve issues like contract disputes or personal injury claims without the formalities of a courtroom. By using arbitration, parties can maintain more control over the process and potentially reach a resolution that suits both sides.

Frequently Asked Questions

What types of disputes can be resolved through arbitration?

Arbitration can be used for a variety of disputes, including commercial, employment, and consumer issues. It is often included as a clause in contracts to ensure that any disagreements are handled through this method.

Is the decision made in arbitration final?

Yes, the decision, known as an award, is generally final and binding on both parties. There are limited grounds for appealing an arbitration award, making it a quicker resolution compared to court cases.

How is an arbitrator chosen?

Parties usually select an arbitrator by mutual agreement, or they may choose from a list provided by an arbitration organization. The chosen arbitrator should be impartial and have expertise relevant to the dispute.