When it is used?2
How it works?3
The arbitration award3
Is Arbitration final?4
Types of Arbitration4
Laws applicable in arbitration5
What it is ARBITRATION ?
In arbitration an independent third party considers both sides in a dispute, and makes a decision to resolve it. The arbitrator is impartial; this means he or she does not take sides. In most cases the arbitrator's decision is legally binding on both sides, so it is not possible to go to court if you are unhappy with the decision.
Most types of arbitration have the following in common:
•Both parties must agree to use the process
•It is private
•The decision is made by a third party, not the people involved •The arbitrator often decides on the basis of written information •If there is a hearing, it is likely to be less formal than court •The process is final and legally binding
•There are limited grounds for challenging the decision
1.When it is used?
Arbitration is used widely for international disputes, disputes between major corporations, employment rights disputes, and consumer disputes. Arbitration is defined, and the rules set out, in the Arbitration Act 1996, which applies to disputes in England and Wales and in Northern Ireland.
Contracts often have a clause stating that arbitration will be used to resolve any dispute between the parties. This will be agreed at the time the contract is signed, and the clause is intended to prevent expensive and time-consuming disputes ending up in court. If you sign a contract with an arbitration clause, it is usually binding – you can’t change your mind later. And arbitration is also binding – if you don’t like the arbitrator’s decision, you can’t go to court afterwards. The only exception is in a consumer contract: if the amount in dispute is less than the small claims limit (usually £5,000 in England and Wales) then an arbitration clause is not binding on the consumer.
Some of the most common conflicts (or disputes) are
Conflict over project priorities
Conflict over administrative procedures
Lack of respect for one another
Conflict over technical opinions and performance
Conflict over staff power resources
Conflict over cost
Conflict over schedules
2.How it works?
The Arbitration Act 1996 lays down strict rules for how arbitration should work. However, arbitration is intended to be less expensive, less formal, and more flexible than court, so the rules of evidence are not as strict, and parties can usually have a say in how they want the hearing to be conducted. Parties can choose a single arbitrator with relevant experience, or select an arbitral panel of three or five arbitrators. Obviously, the larger the panel, the more expensive the process is going to be, and this model is likely to be used in high value commercial disputes.
When arbitration is used in lower value consumer disputes, the arbitrator often makes a decision based on the written evidence which the parties send in, and doesn’t hold a hearing. This is a much quicker, cheaper process. Many arbitration schemes are run on behalf of a consumer sector such as the travel industry, and the organization that runs the scheme will appoint an independent arbitrator.
Once the parties have decided to use arbitration and the process has begun, they usually give up their right to seek a resolution of the matter elsewhere, such as in court or tribunal.
Some providers offer an internet-based arbitration service for money and consumer claims. Others, such as The Association of British Travel Agents (ABTA) make their arbitration service available online, so that all documents can be submitted by email.
3.The arbitration award
After considering the parties' submissions, the arbitrator issues a final and binding 'award', this can...