Arbitration meaning and definition

by Yuvi - January 28, 2023

What is Arbitration?

Arbitration is a form of alternative dispute resolution (ADR) that uses a neutral third party, called an arbitrator, to make a binding decision in a dispute. Arbitration is a process that is like a trial, but it is usually less formal and costs less than traditional litigation.

The first step in the arbitration process is for the parties to agree to go to arbitration and for an arbitrator to be chosen. The arbitrator may be a retired judge, lawyer, or other qualified professional. The parties will then give the arbitrator their evidence and arguments, and the arbitrator will make a decision based on what he or she has heard.

Benefits of Arbitration

One of the key benefits of arbitration is that it is a quicker and more cost-effective process than traditional litigation. Arbitration can be finished in a few weeks or months, while court cases can take years to settle. Also, arbitration is less formal and less expensive than court proceedings, which can save the parties a lot of money.

Another benefit of arbitration is that it is a private process. Arbitration is usually a private process, unlike litigation, which is open to the public. The arbitrator’s decision is also not open to public scrutiny.

Arbitration can also be a more suitable process for resolving certain types of disputes, like commercial or technical disputes. Some cases, for example, may be better suited to arbitration rather than court because the arbitrator has more knowledge or experience in that area.

However, arbitration is not suitable for all types of disputes. For example, arbitration may not be the right choice if one party doesn’t want to take part or if the dispute is about something important to the public and needs to be decided by a court.

Difference between conciliation and Arbitration

Conciliation	Arbitration
A neutral third party, known as a conciliator, facilitates a settlement between the parties.	An arbitrator is a neutral third party who makes a decision that must be followed.
The conciliator does not make a decision.	The arbitrator makes a final and binding decision.
The parties are encouraged to come to a mutually agreed-upon settlement.	The arbitrator makes a decision based on the evidence presented by the parties.
The process is voluntary.	The process is mandatory if agreed upon by the parties.
Conciliation is less formal and less adversarial.	Arbitration is similar to a trial but less formal.
Conciliation proceedings are generally confidential.	Arbitration proceedings are generally confidential.
Conciliation awards are non-binding.	Arbitration awards are legally binding and can be enforced through the courts.

It’s worth noting that both conciliation and arbitration are forms of alternative dispute resolution (ADR) and have their own advantages and limitations. Before deciding which ADR process to use, the parties should think about their own needs and the nature of the conflict.

FAQs

What is arbitration?

How does arbitration differ from conciliation?

In arbitration, a neutral third party called an “arbitrator” makes a decision that is binding on both sides. In conciliation, a neutral third party, called a “conciliator,” helps the two sides come to an agreement without making a decision.

Is arbitration a legally binding process?

Yes, arbitration is a legally binding process, and the decision of the arbitrator is final and binding on the parties.

Can parties have legal representation during arbitration?

Yes, parties are allowed to have legal representation during the arbitration process.

Can arbitration be used for all types of disputes?

No, arbitration might not be the best way to settle a disagreement if it involves a public issue that needs to be decided by a judge or if one of the parties does not want to take part in arbitration.

Can arbitration proceedings be completed in a matter of days or weeks?

Depending on how complicated the case is and how quickly the arbitrator can make a decision, arbitration tends to be faster and less expensive than litigation.

Are arbitration proceedings confidential?

Yes, most arbitration proceedings are private, which means that the parties can talk about sensitive issues without worrying about being watched by the public.

What happens if one party does not comply with the arbitration award?

If one party does not comply with the arbitration award, the other party can seek enforcement through the courts. The award can be enforced as a court order, and not following it can lead to fines and penalties.

Conclusion

In conclusion, arbitration is a way to settle a disagreement without going to court. In arbitration, a neutral third party, called an arbitrator, makes a binding decision about the dispute. Arbitration is a process that is like a trial, but it is usually less formal and costs less than traditional litigation.

Arbitration can be a quick and inexpensive way to settle a dispute, but it doesn’t work for all kinds of disagreements. Parties should think about all their options before choosing the best way to settle their disagreement.