Arbitration is commonly used for the resolution of commercial disputes, especially with regards to international business exchanges. Arbitration is a non-judicial way of settling a dispute. The role of an arbitrator is similar to that of a judge, though the procedures can be less formal and an arbitrator is usually an expert in their own right. Arbitration is usually voluntary but sometimes it is required by law.
In simple terms, arbitration/mediation is one of the different methods by which a dispute between two parties can be settled outside the court by certain compromises with the assistance of a third person chosen by the parties themselves.
Appointment of Arbitrators is usually made by one of three means:
- Disputing parties directly appoint the arbitrator by mutual consent.
- Tribunal members appoint an arbitrator for the International disputes. In this case, each tribunal member appoints one arbitrator and then the arbitrators appoint a third or final arbitrator for the case.
- A third party who is nominated by the disputed parties appoints an arbitrator.
Parties usually ask to resolve disputes through arbitration/mediation due to a variety of perceived potential advantages over judicial proceedings. Companies often need arbitration with their clients, however, they prefer the benefits of courts in disputes with contenders. There are many advantages to arbitration:
- The process can be tailored to suit parties’ particular needs.
- Arbitrators can be chosen for their expertise.
- Arbitration is confidential.
- It can be speedier and cheaper than court.
- There are limited grounds of appeal.
How does it work?
A decision is taken by an arbitrator, either on a documents only basis or following hearings that take place at an agreed venue.
For a dispute to be referred to the arbitrator an arbitration agreement is done either way:
- Both parties will be in agreement for the matter to be referred to arbitration with CIArb (Chartered Institute of Arbitrators).
- There will be an arbitration clause in a contract between the parties that names CIArb, or the President of CIArb, as the appointing body in any dispute under the contract.