The Top 10 Advantages of Using Arbitration

Businesses will invariably get into dispute and terms of contracts will be breached. The question of how these disputes will be resolved is one of the most important consideration for any business. There is of course the legal route through the courts where parties can resolve their disputes and then we have the different types of Alternative Dispute Resolution (ADR). In this article, we are going to look at the advantages of using Arbitration as an effective Dispute resolution process which many organizations are now adopting as the vehicle to dispute settlement.

In brief, arbitration is a method of alternative dispute resolution, often used instead of litigation. It is a form of alternative dispute resolution (ADR) in which a third party will reach a binding decision upon the parties to a dispute. Rather than a judge deciding on the merits of the case in a court room, an arbitrator will decide on the issues in dispute and is able to enforce a binding decision on the parties.

Arbitration will often be undertaken because certain business contracts provide for arbitration should any dispute arise between the parties. But, also, in the absence of any provisions for arbitration in the business contracts, parties may, nevertheless, agree that arbitration is best suited to the dispute and agree to settle through this method rather than litigation.

Arbitration, like all the other dispute resolution processes has its advantages and disadvantages. In this article, we are going to look at some of the advantages of using this route for resolving international disputes for cross-border commercial arrangements.

The Pros of Arbitration versus Court Litigation

1. Arbitration may prove to be quicker than litigation
   If you enter into arbitration you will not have to wait for the court to add you to a list which may well be overcrowded. Instead, with arbitration, you can choose a time for the arbitration to commence, provided a suitable arbitrator is available.
   
   
2. The decision is binding on the parties
   Some forms of ADR are non-binding, thus allowing for the possibility that, despite the legal costs, nothing can be resolved at the end. By submitting to arbitration, each side knows that there will be a definitive outcome.
   
   
3. You can choose the arbitrator
   Both sides will have to agree on an arbitrator; this is a great opportunity to appoint somebody who is extremely familiar with the area in dispute. This may well be a lot more advantageous than appointing a judge who, although legally sound, may not be able to relate to that particular industry’s normal practices.
   
   
4. It is private
   Often the reason that companies include arbitration clauses in contracts is because things are likely to remain confidential. This may help maintain the business relationship of the parties.
   
   
5. Appeal rights
   Ordinarily, an appeal from an arbitration award is permitted only on limited grounds.
   
   
6. Enforcement of the awards
   Arbitral awards are much more easily and consistently enforceable in foreign courts than judgments from foreign courts.
   
   
7. Evidence
   Since the rules of evidence do not apply in an arbitration proceeding, it is less time-consuming and less expensive to present a case in an arbitration proceeding than in a court trial.
   
   
8. Language
   Arbitration also offers parties the ability to choose the language in which the proceedings will be conducted, which is often vital in international arbitration.
   
   
9. Institutional rules
   Parties can agree to conduct arbitration proceedings in accordance with a recognized arbitral institution (e.g. ICC, LCIA, AAA) or to conduct the arbitration ad hoc.
   
   
10. Limited discovery
    Discovery is generally limited, and sometimes totally excluded. This is particularly important to parties with a civil law background.
    
    

About the Author

Elahe Ghazinoori

Elahe Ghazinoori is the course facilitator for PLUS Specialty Training’s Legal courses including Certificate in Business and Commercial Law, Arbitration and Dispute Resolution, Mergers and Acquisitions, and Legal Writing Skills.

Elahe Ghazinoori founded EMG Associates, a legal consultancy firm in 2006, having formerly practiced as an in-house solicitor for a telecommunications company. As EMG Associates' principal presenter, she has a wealth of experience in providing inspiring and engaging training sessions.

Elahe has trained hundreds of lawyers and legal professionals around the world on subjects such as company law, commercial law, contract law, drafting skills, partnership law, insolvency and bankruptcy law, corporate finance, intellectual property and dispute resolution.

Elahe lectures for BPP Law School in their Legal Practice department on subjects such as business law and private company acquisitions. She has also worked as a senior training consultant for over 5 years for one of the world’s largest corporations, American Airlines.