Avoid The Courts, Why Arbitration Makes Sense

The term arbitration implies the final and binding process for resolving a dispute and is generally used in judicial systems as a substitute, especially when the judicial system seems to function too slowly or seem biased or too expensive to use. In communities that do not have a formal law, arbitration is used as a substitute for formal law. Accordingly, the arbitration agreement is a written contract that assigns two or more parties to agree to use this process instead of going to the law courts, to decide upon disputes that may have arisen in the course of dealings with one another. This agreement may usually be just a clause within a larger contract and disputes may concern performance of a specific contract, claims regarding unfair treatment at the workplace, faults in products bought or any other matter that may give rise to dispute.

Unless specified by the parties in the agreement that questions relating to the arbitrabilty of the dispute are to be resolved through arbitration, it is the courts of law that will decide whether or not the parties have an agreement to arbitrate. Most often, parties to a contract will have decided to have included in the writing of the contract, and much before a dispute will have arisen, that should there be any disputes arising in the future that such disputes will be decided through arbitration. The decision to include resolving future disputes through processed outside of the courts will have been included in the arbitration clause of the agreement. With such a specific clause included in the contract it will not be possible for the parties to go to the courts to resolve the dispute; they must arbitrate their disagreement. Such an agreement may be known as pre-dispute arbitration agreement.

In the case of parties that are already having a dispute among themselves it may be possible for them to decide that instead of going to a court of law to resolve the dispute through instituting a civil lawsuit, they may want to instead, settle through arbitration. Even in the instance when people have already approached the law courts to settle the dispute, it may be possible for them to decide upon settling through arbitration, instead. Whatever be the case, the parties will need to sign an agreement in writing that will state that they are willing to arbitrate this specific and existing dispute. Such an agreement may be known as post-dispute arbitration.

Having an arbitration clause within a contract may be different for different parties as well as for different purposes. So, when drafting an agreement keep it simple, provide for division of expenses incurred during arbitration, specify the number of arbitrators and what should their minimum qualifications be, how much discovery will be allowed, schedule when the arbitration should occur, have a confidentiality provision, will the arbitrators also serve as mediators or not, rules of evidence will govern or not, specify whether there will be pre-hearing and post-hearing briefs, specify the format of the arbitration decision, appeal enforcement, choice of law, as well as know the provisional remedies and whether or not there should be mediation, instead of arbitration.

All said and done, the arbitration agreement is important for settling disputes and should be carefully framed. In order to get maximum benefit from the arbitration agreement, it may be most suitable for the concerned party to purchase the draft from the market where these are easily available for a low cost and which have had all the spadework and research already done and need only altering to suit individual needs. There are benefits like time saving, reduced costs and being ready to use off the shelf to be had, when purchasing from the market.