Business, Legal & Accounting Glossary
In arbitration, an independent third party considers both sides in a dispute and makes a decision to resolve it. Arbitration is considered a form of alternative dispute resolution (ADR). It allows two parties to bring their legal dispute before an arbiter, or third party. Arbitration is considered a simplified version of a trial where both parties will receive information prior to the hearing. During the arbitration, both parties can hear witness testimony and present evidence. Each party is also allowed to cross-examine witnesses. Then the arbiter hears the evidence and makes a decision, which is generally binding to both parties.
The voluntary submission of a dispute to an impartial person or people for final and binding determination.
(or) the use of an arbitrator to settle a dispute.
A process of settling legal disputes outside a court of law. In an arbitration proceeding, parties to a dispute submit the matter to an impartial third party for a resolution, agreeing in advance to comply with the judgment rendered. The arbitrator issues his decision after a hearing at which both sides are provided with the opportunity to present evidence and testimony. The arbitrator’s decision is usually final, and courts rarely re-examine it. Arbitration is a well-established and widely used means to end legal disputes. It is one of several categories of ‘alternative dispute resolution’ that offer the parties to a disagreement an option other than the typically expensive and unpleasant litigation process.
Arbitration is a means to settle a disagreement by turning it over to an impartial agent, the arbitrator. In order to properly carry out arbitration, an arbitrator is chosen by the two parties involved in the dispute. The key purpose of arbitration is to resolve the dispute by determining an equitable settlement. Traditionally, arbitration is carried out as a binding procedure. That is every arbitration decision is final and arbitration does not give way to further appeals. In practice, however, arbitration is usually performed by each side selecting one arbitrator, which in turn selects the third one. The dispute of arbitration is then presented to the three arbitrators chosen, with a majority of the arbitrators rendering a final decision. In financial disputes, arbitration is often favoured as a prudent alternative to litigation, which is typically a lengthier, less predictable, and a more resource-consuming process.
Arbitration is the most formal alternative to litigation. In this process, the disputing parties present their case to a neutral third party, who renders a decision. Arbitration is widely used to resolve disputes in both the private and public sector.
Arbitration uses rules of evidence and procedure that are less formal than those followed in trial courts, which usually leads to a faster, less-expensive resolution. There are many types of arbitration in common use: Binding arbitration is similar to a court proceeding in that the arbitrator has the power to impose a decision, although this is sometimes limited by agreement — for example, in “hi-lo arbitration” the parties may agree in advance to a maximum and minimum award. In non-binding arbitration, the arbitrator can recommend but not impose a decision. Many contracts — including those imposed on customers by many financial and healthcare organizations — require mandatory arbitration in the event of a dispute. This may be reasonable when the arbitrator really is neutral, but is justifiably criticized when the large company that writes the contract is able to influence the choice of the arbitrator.
In arbitration, an independent third party considers both sides in a dispute and makes a decision to resolve it. The arbitrator is impartial, means he or she does not take sides. In most cases the arbitrator’s decision is legally binding on both sides, so it is not possible to go to court if you are unhappy with the decision.
Arbitration allows disputes to be settled without going to court, thus saving both time and money. Arbitration and mediation have become the two most popular forms of alternative dispute resolution. Arbitration is considered a more formal process than mediation, and in some states, litigants must first participate in arbitration or mediation before they can proceed to trial.
In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court.
Most types of arbitration have the following in common:
Traditionally, labour and commerce were the two largest areas of the law where disagreeing parties might resort to arbitration proceedings. However, since the mid-1970s, this form of dispute resolution has seen considerable expansion into other legal sectors. Today, for instance, a great many contracts will include clauses specifying arbitration in the event of a dispute between fellow contractees. Reliance on this mode of resolution is also becoming increasingly popular in the case of auto assurance claims and employment disputes. Even international business frictions are now frequently resolved by means of arbitration proceedings. A major reason for this development, no doubt, is that arbitration tends to be quicker, cheaper and more private than the more traditional civil court hearing.
The lawyer for the insurance company and the lawyer for the claimant could not reach an agreement, so the suit went to the judge for arbitration.
Rather than incurring all of the legal costs involved with taking the other person to court, many people find itâ€™s easier to settle a claim in arbitration.
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This glossary post was last updated: 22nd April, 2020 | 246 Views.