What is Arbitration?
Arbitration is the private dispute resolution procedure in which parties opt to select an independent third party to resolve a dispute as an alternative to court action (litigation). Many courts have implemented arbitration programs and many companies and industries have arbitration clauses in their contracts. An arbitration hearing may involve the use of an individual Arbitrator or a Tribunal (Arbitration Panel). Tribunals may consist of any number of arbitrators, however most legal systems use an odd number (usually 3 Arbitrators) to avoid a tie. The disputing parties hand over their power to decide the dispute to the arbitrator(s). Generally the Arbitration decisions are final and binding.
What Are The Different Types Of Arbitration?
• Commercial Arbitration – disputes between commercial enterprises.
• Consumer Arbitration – disputes between consumers and suppliers of goods or services.
• Employment/Labor Arbitration – disputes between employees and employers. Includes Grievance (disputes involving alleged violations or misinterpretations of existing collective agreements) and Contract Arbitrations (disputes involving the terms and conditions of employment to be contained in a collective agreement).
What Are The Advantages Of Arbitration?
• Arbitration is Binding – An arbitration award is binding and usually not subject to appeal.
• Arbitration is Convenient – Hearings are arranged at times and places to suit the parties, arbitrators and witnesses.
• Arbitration is Cost Effective – Usually both of the parties will pay for the arbitrator’s services, which is often a one-time fee (no mounting billable hours).
• Arbitration is Efficient– Arbitration can usually be heard sooner than it takes for court proceedings to be heard. As well, the arbitration hearing should be shorter in length, and the preparation work less demanding.
• Arbitration is Flexible – The procedures can be segmented, streamlined or simplified, according to the circumstances.
• Arbitration is Private – Arbitration hearings are confidential, private meetings. Final decisions are not published, nor are they directly accessible.
What Happens During An Arbitration?
• Initiation – A party requests a dispute to be referred to arbitration.
• Appointment of Arbitrator – Arbitrators may be appointed by the disputing parties or by an external party (i.e., court, state agency, union)
• Preliminary Meeting – A meeting between the arbitrator(s) and the parties to review the dispute in question and to discuss the process.
• Pleadings – The Claimant sets out a Statement of Claim to summarize the matters in dispute and the remedy sought. The Respondent submits a response to admit or deny the claims and assert any counterclaim.
• Discovery and Inspection – The investigation period in which each party is required to list, gather, and prepare all relevant documents for submission to the arbitrator(s).
• Exchange of Evidence – The written evidence is exchanged and given to the Arbitrator for review prior to the hearing.
• Hearing – The private meeting in which the arbitrator listens to any oral statements, questions parties/witnesses and reviews submitted evidence and legal submissions.
• Award – The arbitrator(s) consider all the information and make a decision. An award or order is written to summarize the proceedings and give the decisions.