What Is Arbitration?
Arbitration is an alternative dispute resolution (ADR) method in which the parties to a conflict agree to submit their case to a neutral arbitrator instead of going to court. The arbitrator’s decision, known as an award, is binding and enforceable. Arbitration is commonly used in commercial disputes, especially those involving international contracts, because it is faster, confidential, and often more flexible than litigation.
Key Aspects of the Concept
- Provides an alternative to court litigation.
- Parties select arbitrators with expertise relevant to the dispute.
- Proceedings are private and confidential.
- Arbitration awards are legally binding and recognized internationally (New York Convention).
- Faster and often less formal than traditional litigation.
- Particularly common in international trade and investment disputes.
- May include clauses in contracts requiring arbitration in case of disputes.
Examples of the Term “Arbitration” in Use
- The two companies opted for arbitration to resolve their contractual dispute instead of going to court.
- Arbitration resulted in a binding award within six months, saving both parties time and money.
- Many cross-border contracts include arbitration clauses to ensure neutrality in dispute resolution.
- The arbitration tribunal consisted of three experts in international commercial law.