What is Arbitration?
Arbitration is one form of dispute resolution alternative to court litigation. Perhaps it should be called one form of “Appropriate Dispute Resolution”. Its purpose is to utilize an adjudicator to resolve a dispute that cannot be resolved through consensus and court litigation appears to be prohibitively expensive, inconvenient, or both. While arbitration is the most frequent dispute resolution mechanism for international matters, it is also very appropriate for disputes of commercial and real estate matters. Rather than proceeding through the formal steps of a court of law and the random appointment of a judge, arbitration involves the disputants in the choice of adjudicator (an independent and unbiased person) and to a certain extent their choice of governance of the dispute. The eventual decision is an award, rather than a court judgement. Both are equally binding.
Many parties select arbitration as a dispute resolution process precisely to secure privacy and confidentiality. Whether to avoid public scrutiny protect trade secrets, or for other reasons, confidentiality is a key element of arbitration.
Disputants have a reasonable amount of input with respect to the manner in which an arbitration will be conducted. Typically, the arbitrator controls the process, including the examination by the arbitrator (as well as their counsel) of witnesses on written statements – indeed the arbitrator can direct the examination of an expert chosen by the arbitrator. It is up to the arbitrator, subject to submissions and consensus of the parties (or their counsel if appropriate), to direct whether oral evidence is necessary, or written statements are sufficient. The formal rules of evidence that are an integral part of litigation do not govern arbitrations. The pleadings still require sufficient particularity for the process to arbitration process to be a fair one and assist the disputants in meeting whatever case is necessary to be successful.
Arbitrations are usually more expeditions than the court system. The hearings take place when it is convenient to all. Discoveries, while perhaps available, are not the norm. Visits can be made if the geographic location of the dispute is key (for example a constructions site). There are no public records, but an arbitrator will be required to provide an award in writing. That award is usually provided in a relatively short time frame. The award is binding, subject to arbitral error in jurisdiction or applying the law.
Most arbitrations are commenced by operation of an arbitration clause in a contract between the disputants. Arbitrations can be commenced in other situations due to particular legislation or by consent.