Arbitration

Why Arbitrate?

Why Arbitrate?

Arbitration is a private, informal process by which the parties to a contract agree, in writing, to submit their disputes to one or more impartial persons who will adjudicate and resolve the controversy by rendering a final and binding award. It is used for a wide variety of disputes – from commercial disagreements involving technology, intellectual property, major commerical activities, construction, securities transactions, real-estate, insurance claims and employment grievances.

Normally, parties seek to ensure that their contract requires them to enter arbitration if there is a dispute concerning the contract. This usually has cost-saving implications, but whilst in some cases savings are significant when compared to the costs of court hearings (such as with Internet Domain Disputes), this is not always the case and the costs of complex commerical arbitration may approach nearly the costs of a full court hearing.

If costs are not saved, why do it?

Arbitration has certain advantages over Court proceedings.

SPEED: In many cases an arbitration can be heard without the long delay that is often necessary for a case to go to court as it is possible to choose arbitrators to suit the timetable of the parties.

FLEXIBILITY: Unlike court rules which are usually set out in formal procedures which are never varied, parties to an arbitration contract are free to customize and refine the basic arbitration procedures to meet their particular needs. If the parties agree on a procedure that conflicts with the rules of the Arbitration body selected, the arbitration body will respect the procedure opted-for by the parties unless these would, in the experience of the tribunal, be unworkable.

CONFIDENTIALITY & GOODWILL: The adversarial nature of court hearings usually guarantees that and the publicity brought about by a public trial will usually guarantee that parties to a dispute heard in court will never be able to work together again.  Arbitration hearings are usually held in private and in a less adversarial setting where the parties feel that a business diagreement is being sorted out, not that they are going to war. In many cases, the arbitrators will try to persuade the parties to go through mediation which most arbitration systems can provide in an attempt to expedite peaceful settlement without going to arbitration at all. The more business-friendly nature of arbitration is therefore a form of insurance against loss of good will and, if handled by experienced arbitrators and arbitration-counsel often enables parties will continue afer the hearing to have a business relationship.