When a business needs to resolve a dispute, it doesn’t always have to go to court. Arbitration may be an option.
It is a legal process used to resolve disputes outside of the court system using a neutral third party, called an arbitrator, to hear the parties’ dispute and make a legally binding decision.
Arbitration may be used in a variety of settings but is used to resolve business disputes because it is often less formal and less expensive than going to court. It may also be more time-efficient for the parties.
The business can add an arbitration clause to its contracts, which requires the parties to submit their disputes to arbitration or the parties can agree to arbitration after the dispute arises.
The arbitration process begins when the parties submit their dispute to the arbitrator. The arbitrator then holds a hearing where the parties can present evidence and argue their position. The arbitrator may ask for supporting documents.
Once the hearing is complete, the arbitrator will issue a decision, called an award. The parties are bound to accept the decision as final and under most circumstances, they cannot appeal it.
If either party challenges the decision, it must be based on evidence that there was fraud, corruption or misconduct by the arbitrator. Usually, the court will accept the decision of the arbitrator.
If a business has a dispute, there are options to address it through arbitration, which may be a more efficient process for all of the parties involved.