What Does Arbitration Mean?

Arbitration is a legal term that refers to a method of resolving disputes outside the traditional court system. It is a form of alternative dispute resolution (ADR), a practice designed to avoid lengthy and costly legal battles in courts.

In arbitration, an impartial person or panel, known as an arbitrator or arbitration panel, makes a decision on a dispute. This decision could be regarding any matter – it could be a commercial transaction, a disagreement between businesses, or a labour dispute. The purpose of arbitration is to provide a binding decision that can only be overturned in very restricted circumstances. It’s important to remember that by opting for arbitration, parties often give up their right to appeal the decision in court.

The parties in dispute usually agree on the arbitrator, who could be a single individual or a panel. The arbitrator could be a lawyer, a retired judge, or a professional in the field related to the dispute. These professionals bring their experience and skills to bear on the proceedings, helping to ensure that the final decision is informed, fair, and equitable.

The arbitration process typically involves the exchange of statements of the case, the collection and exchange of evidence, and a hearing where the parties present their case. Some arbitrations might involve a more informal process.

It’s worth noting that arbitration differs from mediation, another form of ADR. While an arbitrator makes a final decision on the dispute, a mediator helps the parties to reach their own agreement.

One of the key advantages of arbitration is its confidentiality. Unlike most court trials, arbitration proceedings and decisions are typically kept confidential. This means sensitive information that could damage a party’s reputation if made public is kept under wraps. Other advantages include a generally faster resolution than traditional litigation, less formality and more flexibility in process and procedural rules, and the ability for the parties to select their own arbitrators.

However, arbitration also has its downsides. Those include limited opportunities for appeal, potentially sizable arbitration costs, and the potential for privately-selected arbitrators to be biased.

In conclusion, arbitration is a legal means of dispute resolution providing a binding decision outside of a traditional court setting. It offers an alternative route for parties who want to resolve their disagreements more swiftly and confidentially than they might in court. While it does come with some potential challenges, many individuals and businesses see it as providing a pragmatic and useful alternative to traditional litigation.