What is Arbitration?

A large majority of disputes never see public trial. Instead, most cases are settled out of court with arbitration, otherwise known as ADR, a common method for settling disputes. But what is arbitration? Many SMEs and individuals who have little to no experience may be frightened off by the prospect of this form of dispute resolution but it is simpler and often easier for both parties. We’re going to look at what arbitration and how it works to demystify the process.


What is Arbitration?

Arbitration is a form of ADR or Alternative Dispute Resolution. This alternative to full trial is often preferred by parties as it allows for disputes to be settled quickly and without public scrutiny. In some arbitration cases, parties don’t even have to meet which can avoid further distress.


How does Arbitration work?

According to the letter of the law;

The Arbitration Act 1996 regulates arbitration proceedings in England, Wales and Northern Ireland. The Arbitration (Scotland) Act 2010 regulates and provides a structure for arbitration proceedings in Scotland.”

This arbitration process is like a tribunal. The claimant provides a case against the respondent. Both parties put forward their case and relevant evidence. An independent arbitrator or in some cases a panel of three arbitrators hear the case. While this form is not a full trial, disclosure of documents as well cross-examination of witnesses are often used to establish facts and decide the case. The arbitrator, or arbitrators, make a final decision based on the evidence presented by the parties concerned.

It’s important to note that arbitration is voluntary and both sides need to agree on arbitration. There should also be an agreement in advance to accept and abide by the arbitrator’s decision.

The Benefits of Arbitration

Arbitration allows you to settle a dispute without having to go to court. This often means cases can be tried quicker and with lower legal costs. Even without going to full trial, the arbitrator’s decision is final and is legally binding. This decision is often referred to as an ‘award’.


What does the Arbitrator do?

As mentioned above the arbitrator serves as the ‘judge’ in ADR. The arbitrator will set out the procedure, hear each party and analyse the evidence submitted. Parties will also have the opportunity to respond to the case put forward.

The arbitrator will then consider the complaint, defence, and evidence. They may ask for further details. Many ADR cases can be resolved without either party meeting at all with testimony and written evidence all that’s required. However, in some cases, the arbitrator may decide the case warrants an in-person tribunal to parse more complicated cases.


What happens after Arbitration?

The timescale for the hearing and decision is often set by an agreement between both parties before arbitration begins. The arbitrator will make their decision and send a copy to each party with details about their decision including any compensation.

If you win the case, you will be awarded compensation. This can include the fee for registering the claim if it was agreed upon beforehand. You may also be entitled to any interest in compensation between the date of the award and the date payment is received. If payment is not forthcoming, the award can be registered in court to force the other party to pay what they owe.

If you lose the case, you will have to follow the findings of the arbitrator unless you think and can prove the case wasn’t handled properly. Your legal time would probably advise you on what to do if you lose a case in arbitration.


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