What is arbitration:

Arbitration is a private method of Alternative Dispute Resolution (ADR), where the parties involved agree that their dispute will be heard by an arbitrator, rather than a judge. This is an alternative method to approaching a court, and can be favoured due to its time efficiency and reduced cost. The arbitrator is usually a senior lawyer, commonly a retired judge,  who will be appointed by agreement between the parties to hear the case. When dealing with complex cases, the arbitrator can be assisted by expert assessors. In an arbitration process, appearance by the parties is not usually required, but if the parties do appear before an arbitrator, formalities of the court are not observed.

The legislation that deals with arbitration matters is the Arbitration Act of 1996. The act imposes a duty to act fairly and impartially between the parties, providing each a reasonable opportunity to put their case forward.

Strengths of Arbitration:

  • The primary benefit of Arbitration is the flexibility it provides. The parties have full control of the process and can determine the conduct of the proceedings, by agreement. The procedure will thereby suit the specific requirements of each individual case.
  • Another benefit of Arbitration is its accessibility. Arbitration fills this gap by providing a dispute resolution mechanism that is similar in procedure and requirements of fairness to a trial but allows anyone to utilise it.
  • The arbitration process is time efficient – the decision of the arbitrator is final and there is little scope to challenge it, therefore, bringing to an end a proceeding which could have taken years to conclude in a court system. Furthermore, in the Arbitration process, dates can be agreed between the parties to those most suitable for them.
  • Lastly, many people opt for Arbitration because of its privacy. Only those who are involved in the case can attend the tribunal, as Arbitration is closed, whereas cases heard in court are open to the public. This is beneficial to those with sensitive subject matters.

Weaknesses of Arbitration:

  • The prerequisite of Arbitration is good faith and agreement between the parties involved in the procedure. If a unanimous agreement is not established, arbitration will not be a suitable option. This is not the case in litigation as each party may start proceedings against the other at any time. Furthermore, an Arbitrator’s power is limited in punishing litigants who are obstructive in their proceedings, whereas the Civil Procedure Rules provide the court with wide powers to deal with contempt of court.
  • More importantly, there is limited scope in challenging the decision of an Arbitrator. The aggrieved party would have to satisfy three criteria’s before taking the matter to the Arbitration tribunal; 1) that the tribunal lacked substantive jurisdiction; 2) there was a serious irregularity in the proceedings which would justify the setting aside of the award; 3) the arbitrator erred on a specific point of law. Cases that are dealt with in the court provide scope for challenging the validity of the judge’s decision, either by way of appeal or judicial review.
  • Despite Arbitration being a cheaper method than litigation, the parties would still have to incur the costs of the Arbitrator, the venue in which the Arbitration is to take place, and they still need legal representation.

Nevertheless, Arbitration is still viewed as a more attractive option in comparison to traditional litigation. Statistics prove that Arbitration faces yearly growth, with many people opting for this Alternative Dispute Resolution than going through the court system. The efficiency of Arbitration makes it more favourable, especially in business disputes, where time is of the essence.

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