Legal arbitration is a method of resolving disputes outside of court, with an arbitrator making decisions after hearing evidence. It can be used for various issues, and is often cheaper and faster than going to court. Companies may include arbitration clauses in contracts, which can be mandatory or voluntary and may be binding or non-binding. The terms of the arbitration agreement can be specific and determine various aspects of the process. Appeals may be possible in limited circumstances.
Legal arbitration is an out-of-court method of resolving disputes between two or more parties. In a typical arbitration proceeding, an independent arbitrator or arbitration panel serves as judge and jury. The arbitrator usually performs functions such as hearing each side’s case, examining evidence, and making decisions on procedural matters. During the proceedings, an arbitration counsel represents each party. After all the evidence has been presented, the arbitrator makes a decision, which may or may not be legally binding, depending on the terms of the legal arbitration.
Arbitration can be used to resolve a range of issues, from commercial disputes and consumer cases to divorce and child custody proceedings. The parties may prefer legal arbitration rather than going to court because it is often cheaper, faster, and less formal. Arbitration can also provide the parties with greater privacy and greater convenience. A statutory arbitration is generally more formal than other alternative dispute resolution (ADR) methods such as mediation and negotiation. These ADR methods usually involve a more collaborative approach to resolving a dispute and do not end with a binding judgment.
In the business world, companies often include arbitration clauses in their contracts with suppliers, customers and other entities. Some contracts require mandatory arbitration, which means that the parties must resolve any disputes through statutory arbitration. Other contracts allow for voluntary arbitration, in which case the parties are not required to resolve a dispute using arbitral methods. In the event of a voluntary proceeding, the parties still retain the right to sue and challenge the final decision of the arbitrator.
A clause in the arbitration agreement usually specifies whether the statutory arbitration will be binding on the parties. In a binding arbitration proceeding, the parties must abide by the final decision of the arbitrator, just as they would in a court of law. Non-binding arbitration, on the other hand, means that the parties can still choose to take the case to court or use another form of dispute resolution.
Even in binding statutory arbitration, an arbitrator’s decision may be appealed in limited circumstances. For example, a court may reverse the decision if the arbitrator can be shown to have acted corruptly or was unfairly biased against a party. A court may also consider an appeal if the arbitrator has been bribed or has exceeded his authority.
Arbitration clauses are very broad in scope. Some contracts include simple clauses that establish an agreement for legal arbitration in the event of a dispute. Other provisions include specific requirements such as the seat of the arbitration, the number of arbitrators to be selected, who pays the attorneys’ fees and court costs, and which set of formal arbitration rules apply. As noted above, the contractual terms may also determine whether or not the arbitration will be binding and whether it will be mandatory or voluntary.
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