Arbitration is a form of alternative dispute resolution (ADR) that involves the settlement of a legal or contractual dispute outside of the traditional court system. The parties involved in the dispute present their arguments and evidence to a neutral third party known as an arbitrator or a panel of arbitrators, and they are involved in the process of selecting the arbitrator(s). The arbitrator is compensated for their time. These arbitrators are typically experts in the relevant field or may be former judges.
The process of arbitration is generally less formal and more flexible than traditional litigation. It is often chosen as an alternative to going to court because it can be faster, more cost-effective, and allows for greater confidentiality. Arbitration is a private, non-public process, so it can be appealing for companies in disputes over sensitive issues. Arbitration can be voluntary if both parties agree to use this method, or it can be mandatory if it is specified in a contract that any disputes arising from it will be resolved through arbitration. On the other hand, arbitration can be more costly than going to court because the parties usually have to pay their attorneys’ hourly rates, as well as the hourly rate of the arbitrator. Also, the rules of the arbitration company apply, rather than standard legal rules that many attorneys are used to.
The arbitrator's decision, known as the arbitration award, is usually legally binding on the parties involved, and they are generally bound to abide by the arbitrator's ruling. However, there are limited grounds for challenging the award, such as procedural irregularities or issues of bias.
Arbitration is used in various fields, including commercial contracts, labor disputes, construction matters, international trade, and even in resolving certain consumer disputes. KS Law has experience in arbitrations on a variety of topics. If you or your company are facing this issue, reach out today!