Arbitration is a type of alternative dispute resolution that allows participants the opportunity to resolve their disputes in a manner that is more private and potentially more cost and time-saving. Arbitration is not always well understood, however, so it is helpful to be familiar with how it works and the potential advantages of the arbitration process.
How arbitration begins
The arbitration process typically begins with one party to a dispute providing notice to another party of their intent to arbitrate the dispute. If the other party agrees, the arbitration process then begins based on rules established by the parties or included in a contract. Contracts can also include arbitration provisions.
How arbitration is decided
The parties can select the arbitrator, or arbitrators, they wish to hear their dispute by agreement. Timelines for the arbitration should also be outlined in the rules. The discovery process, and evidence rules, are not commonly as complex as in a litigated dispute.
The parties to the dispute will then have the opportunity to make their arguments in front of the arbitrators. The arbitrator or arbitrators will make a decision and the arbitration agreement or contract will usually specify if the arbitration is binding. Unlike mediation in which the mediator has no decision-making authority, the arbitrator makes a decision on the outcome of the dispute during the arbitration process.
How arbitration can be helpful
As one type of alternative dispute resolution, arbitration is a process that is helpful for parties to a dispute to be familiar with. Whether the dispute is over a contract disagreement or construction defect concern, arbitration may be able to help the parties resolve their concerns in a manner that is more efficient in terms of costs and time and is worth considering for that reason.