Arbitration is a method of alternative dispute resolution where parties involved in a legal dispute agree to have their case decided by an impartial arbitrator rather than going to court. It is a confidential and less formal process than litigation and can often be more cost-effective and time-efficient. In this guide, we will explore the key aspects of arbitration, including its benefits, process, and enforcement of awards.
Benefits of Arbitration
There are several benefits to choosing arbitration as a method of resolving disputes:
- Confidentiality: Arbitration proceedings are private and confidential, unlike court hearings, which are typically open to the public.
- Flexibility: Parties have more control over the arbitration process, including selecting the arbitrator, venue, and rules governing the proceedings.
- Speed: Arbitration can often be resolved more quickly than court proceedings, as parties can schedule hearings at their convenience.
- Cost-effective: While there are costs associated with arbitration, they are generally lower than the expenses involved in litigating a case in court.
The Arbitration Process
The arbitration process typically involves the following steps:
- Agreement to arbitrate: Parties must agree to resolve their dispute through arbitration, either through a pre-existing arbitration clause in a contract or through a separate agreement.
- Selection of arbitrator: Parties can either agree on a single arbitrator or a panel of arbitrators to hear their case. The arbitrator(s) must be impartial and have the necessary expertise in the subject matter of the dispute.
- Preliminary conference: The arbitrator(s) will hold a preliminary conference with the parties to discuss the procedural aspects of the arbitration, including the timeline for submissions and hearings.
- Exchange of evidence: Parties will exchange relevant documents and evidence to support their case, similar to the discovery process in litigation.
- Hearings: The arbitrator(s) will conduct hearings where parties present their arguments and evidence. Witnesses may be called to testify, and experts may provide their opinions on technical issues.
- Decision: The arbitrator(s) will issue a written decision, known as an award, which is binding on the parties. The award is enforceable in court.
Enforcement of Arbitration Awards
Arbitration awards are generally easier to enforce than court judgements, as they are subject to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This international treaty requires signatory countries to recognise and enforce arbitration awards made in other member states. In the UK, the Arbitration Act 1996 governs the enforcement of arbitration awards.
If a party refuses to comply with an arbitration award, the prevailing party can apply to the court for enforcement. The court will review the award and, if satisfied that it meets the requirements of the Arbitration Act, will issue a judgement in favour of the prevailing party.
Conclusion
Arbitration is a valuable tool for resolving disputes outside of the traditional court system. Its benefits include confidentiality, flexibility, speed, and cost-effectiveness. By understanding the arbitration process and the enforcement of awards, parties can make informed decisions about whether arbitration is the right choice for their dispute.
