Arbitration and Business
It is important for businesses today to know how to resolve disputes. Before entering into any agreement, it is wise to anticipate how to resolve disputes. IF you have a dispute with another company, resolving it can cost your money, time and your energy. It only takes proper planning and your business can reduce risk and will be in a better position to resolve it favorably without spending too much. The business that understands dispute resolution is better prepared to direct its counsel.
Dispute resolution is done in many ways by businesses today. The four common methods used are voluntary negotiation and settlement or work-out, court litigation in state or federal courts, mediation, or arbitration.
IF two parties are signing an agreement and they have decided that arbitration is the best method of any dispute resolution, then this should be specified in the agreement. The contract will inset a typical arbitration clause, after negotiation. arbitrators resolve the dispute in the process of arbitration. They also agree that the award of the arbitration may be enforced by a court, if the losing party does not honor the award. All state and federal courts enforce proper arbitration awards.
Below are the implications of having arbitration as the method of dispute resolution by two parties.
One implication is that all disputes are arbitrable. With an arbiter, one party cannot do delay tactics so that his payment obligations can be extended.
Usually, the name of the organization that will do the arbitration is included in the agreement, and when this is the case, both parties automatically incorporate a complete set of rules of informal procedure used to resolve similar disputes.
The location of the dispute resolution proceedings is agreed upon.
Experienced arbitrators selected by the parties will decide the matter. arbiters should have expertise and experience in the are of the business. IF the two parties in dispute are construction companies, then the arbitrator should have experience in construction disputes. This applies for any dispute in any field of business.
Most arbitrators are experienced and vetted adjudicators. They will take time to hear the evidence and decide the dispute in a more informal procedure than court litigation. Both parties can agree on one or three arbitrators to decide the dispute. It would take more time and will cost more if there are three arbiters deciding the issue.
The parties’ time and expenses are saved because arbitration has limited discover procedures.
In arbitration, the parties agree that the costs and attorney’s fees will be assessed by the arbitrator against the losing party. This is beneficial and encourages early settlement discussions.
Arbitration hearings are much more informal than court proceedings. In arbitration, the rules of procedures used and required by law and the formal rules of evidence do not bind the arbitrators.
Arbitrators do not settle or mediate disputes, but they make the final decision, Arbiters only need to hear the evidence and the view of the parties before making a final and binding decision.