Binding arbitration

Binding Arbitration is a form of alternative dispute resolution which is a legal technique for the resolution of disputes outside the courts. It is a process in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.

Overview

In choosing arbitration, the parties opt for a private dispute resolution procedure instead of going to court. Its global governing body is the International Chamber of Commerce which provides a set of rules for the conduct of the proceedings.

Process

The process of binding arbitration involves the disputing parties presenting their case to an arbitrator or panel of arbitrators, who will make a decision on the matter. This decision is final and legally binding, and can be enforced in the same manner as a court judgment.

Advantages and Disadvantages

Binding arbitration has several advantages over litigation, including speed, privacy, and cost. However, it also has disadvantages, such as the potential for unequal bargaining power, the lack of a formal evidence process, and the difficulty of appealing an arbitrator's decision.

Types of Arbitration

There are two main types of arbitration: ad hoc arbitration and institutional arbitration. Ad hoc arbitration is where the parties to the dispute determine the rules and procedures for the arbitration themselves, or choose an established set of rules. Institutional arbitration is where a specialized institution intercedes and administers the arbitration process.

Legal Framework

The legal framework for arbitration is provided by the New York Convention, a treaty that has been ratified by more than 150 countries. It provides for the recognition and enforcement of foreign arbitral awards.

Criticisms

Critics of binding arbitration argue that it is less transparent than court litigation and that it can be biased towards large corporations, which may have more experience and resources than individuals in arbitration proceedings.