The arbitration process involves parties taking their disputes to a non-partisan arbitrator, who acts as a sort of informal judge. In arbitration, the two parties submit their cases to a neutral third-party, who makes the ruling.
Through the Arbitration Clause, parties agree to have any disputes they have come up with resolved by arbitration, rather than going through the normal judicial process. In case of any future disputes arising out of a contract, the parties place the arbitration clause into the contract at issue.
The dispute is filed in the arbitration authority, the parties mutually agree on an arbitrator, and hearings may commence. If parties agree to arbitrate on their own initiative, they generally choose an arbitrator from an arbitral organization that has been mutually agreed to. Both parties will try to choose an arbitrator, someone on whom they can agree, who will be able to serve their needs, depending on the nature of their dispute.
In choosing arbitration, parties opt for a private dispute settlement process, out of the courts. In most arbitrations, lawyers, accountants, and other business professionals resolve disputes between two or more parties on a corporate panel, rather than having a judge or jury decide your dispute in a courtroom. Because arbitrations are not conducted before a judge in a courtroom, the arbitration process may be simpler and more cost-effective for the parties involved.
While parties will still typically need to pay for lawyers, and they will need to cover the costs of the arbitrators themselves, in the long run, arbitration often costs less, since disputes can be settled more quickly and there are fewer opportunities to appeal. Arbitration disputes are typically settled more quickly than disputes that reach a trial, even in cases where a party can retain an attorney. Many retired or former judges actually act as arbitrators, since the only common requirement is that parties agree on who will be arbitrator.
These arbitrators will examine the parties documents or briefs outlining claims and defenses related to the dispute, holding a hearing in which the parties introduce documents as evidence and witnesses give evidence, less formally than a trial. Put (relatively) simply, arbitration is a dispute settlement method between two or more parties that agrees for their cases to be heard and settled by an independent court, following a procedure set out in advance by that independent court. Arbitration is a procedure whereby the dispute is submitted, by agreement from both parties, to one or more arbitrators, who render binding decisions about the dispute.
If the arbitration is not binding, then any party may bring the matter before a tribunal in a specified period of time. As in discovery, the types of evidence allowed may be determined by a parties agreement, the rules of the arbitration organization, or by an individual arbitrator. In these cases, an arbitrage attorney can help clients obtain what is known as third-party financing, though funders seldom finance cases internationally with amounts less than $3 million.