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What Arbitration Entail?

What is Arbitration?
Arbitration is a procedure in which a dispute is submitted, by agreement of the parties to the dispute, to one or more neutrals called the Arbitrator(s) who will make a binding decision called (an award) on the dispute.

Arbitration is a form of binding dispute resolution procedure, and entirely distinct from the various forms of non-binding dispute resolution procedures, such as negotiation, mediation and determinations by experts.

Why Arbitration?
Arbitration in today’s world is commonly used for the resolution of international disputes, disputes between major corporations, employment rights disputes, and consumer disputes.
Some International organizations have adopted their own processes and procedures. Once the parties have decided to use arbitration, they usually give up their right to seek a resolution of the matter elsewhere, such as in court or tribunal.

Arbitration is intended to be less expensive, less formal, and more flexible than court proceedings, so the rules of evidence are not as strict. parties can usually have a say in how they want the hearing to be conducted.

Who can be an Arbitrator?
An Arbitrator may be a lawyer, an engineer, accountant, or other experts depending upon the nature and complexity of the claim.
What is the nature of an Arbitration Proceeding?
The Arbitrator can decide on the basis of written information and where there is a hearing, it is less formal than court proceedings.

What are other advantages of settling disputes by Arbitration?
In addition to being less formal than litigation, arbitration proceedings pride itself in being:

  • Consensual – Parties in an arbitration proceeding agree that the dispute arising from their transaction should be settled by arbitration. Thus in case of future disputes, an arbitration clause is inserted in the contractual agreement. If a contract is signed with an arbitration clause, it is binding. On the other hand, in the case of existing disputes, referral to arbitration is by means of a Submission Agreement between the parties. Unlike ADR such as mediation and negotiation, a party cannot unilaterally withdraw from arbitration.
  • The Parties in dispute can choose the Arbitrator(s)- In the case of appointment of a sole arbitrator, the parties to the contract can usually choose or select an arbitrator, provided they can agree on one. On the other hand, where the parties choose to have a three-man arbitral tribunal/panel, each party appoints one of the arbitrators each. These two arbitrators so appointed by the parties will then appoint the presiding arbitrator.
  • Arbitration Proceeding is Confidential in nature: The confidential nature of the Arbitral Proceeding makes it very attractive in delicate and sensitive cases. Companies who do not want their company’s confidentiality and business secrets exposed therefore prefer this mode of dispute resolution
  • The decision of the Arbitral Tribunal is final and easy to enforce: The final decision of the Arbitrator(s) is known as an award and is legally binding on both sides. After considering the parties’ submissions, the arbitrator issues a final and binding award. The award usually includes reasons for the decision. There are limited grounds for challenging the decision.
    Arbitration Clause:
    Any dispute or claim arising out of or relating to this agreement, including any question regarding its existence, interpretation, validity, breach or termination or the business relationship created thereof, shall unless resolved by the parties within 14 days, be referred to and finally settled by arbitration with the appointment of one (or more) arbitrators by the AICA.

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