Arbitration agreement

Arbitration Agreement

An arbitration agreement is a written contract in which two or more parties agree to settle a dispute outside of court. The arbitration agreement is ordinarily a clause in a larger contract. The dispute may be about the performance of a specific contract, a claim of unfair or illegal treatment in the workplace, a faulty product, among others. The parties agree to arbitration, a process in which an impartial third party, known as an arbitrator, hears the evidence and makes a decision. Arbitration is different from a judicial proceeding because the parties agree to be bound by the arbitration decision.

Overview

Arbitration agreements are widely used in a variety of contexts, including commercial, employment, consumer and family disputes. The main advantage of arbitration is that it can provide a speedy and cost-effective method of dispute resolution. It is a private process, and the parties can agree to keep the proceedings and terms of the final resolution confidential.

Legal Framework

In many jurisdictions, arbitration agreements are governed by both national and international law. In the United States, for example, arbitration agreements involving interstate commerce are governed by the Federal Arbitration Act (FAA). Internationally, the New York Convention provides a framework for the enforcement of arbitration agreements and awards.

Criticisms

Despite its advantages, arbitration has also been criticized. Some argue that it limits access to justice by preventing individuals from taking their claims to court. Others argue that arbitration agreements can be unfair, particularly in situations where there is a significant power imbalance between the parties, such as in employment or consumer disputes.

See Also

• Alternative dispute resolution
• Mediation
• Conciliation