What is arbitration?

Jump to Section

Need help with an Arbitration Agreement?

CREATE A FREE PROJECT POSTING
Post Project Now

Arbitration is a form of alternative dispute resolution (ADR). This is a way to resolve disputes outside of judiciary courts. The dispute will be decided by one or more persons (the arbitrators’, arbiters’ or arbitral tribunal), which determine the arbitration award.

An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding. Arbitration can be voluntary or mandatory.

Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In the United States, arbitration is frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of commercial or employment contracts and may include a waiver of the right to bring a class action claim.

Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration. Businesses may prefer arbitration rather than a lawsuit due to the lower costs and time commitments for all parties involved.

What Is Arbitration in Law?

Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute. In choosing arbitration, the parties opt for a private dispute resolution procedure outside of courts.

The principal characteristics of arbitration are:

  • Consensual by both parties. Arbitration can only take place if both parties have agreed to it. In the case of future disputes arising under a contract , the parties insert an arbitration clause in the relevant contract.
  • The parties choose the arbitrator(s). Under the World Intellectual Property Organization (WIPO) Arbitration Rules, the parties can select a sole arbitrator together. If they choose to have a three-member arbitral tribunal, each party appoints one of the arbitrators; those two persons then agree on the presiding arbitrator.
  • Arbitration is neutral. In addition to their selection of neutrals of appropriate nationality, parties are able to choose such important elements as the applicable law, language and venue of the arbitration. This allows them to ensure that no party enjoys a home court advantage.
  • Arbitration is a confidential procedure. The WIPO Rules specifically protect the confidentiality of the existence of the arbitration, any disclosures made during that procedure, and the award. In certain circumstances, the WIPO Rules allow a party to restrict access to trade secrets or other confidential information that is submitted to the arbitral tribunal or to a confidentiality advisor to the tribunal.
  • The decision of the arbitral is final and easy to enforce. Under the WIPO Rules, the parties agree to carry out the decision of the arbitral tribunal without delay. International awards are enforced by national courts under the New York Convention, which permits them to be set aside only in very limited circumstances.

Here is an article that goes over arbitration rules.

How the Arbitration Process Works

The process of arbitration typically involves the following:

  1. Filing and initiation . One party files a Demand for Arbitration, which is the start of the process.
  2. Arbitrator selection . Both parties work to select an arbitrator, one they can agree on and who can meet their needs based on the nature of their dispute.
  3. Preliminary hearing . Parties meet to discuss substantive case issues, information exchange, witness lists, etc.
  4. Information exchange and preparation . Parties share information and arbitrators handle any related challenges.
  5. Hearings . Parties present evidence and testimonies before the arbitrator.
  6. Post hearing submissions . If necessary, parties submit additional information to the arbitrator.
  7. Award . The arbitrator renders a decision (award) and closes the case.

Because the cost of arbitration is less expensive, many contracts and legal agreements contain provisions to resolve dispues through the arbitration process.

Another way of putting it, the arbitration process works as follows:

  • Pre-arbitration process
  • Decide which issues are covered
  • Determine who is covered
  • Set parameters for discovery
  • Select an arbitrator
  • Arbitration hearing
  • Arbitration decision

Refer to the article here and another article here for more information on the arbitration process.

JAMS has taken an industry-leading role to ensure arbitration remains an attractive alternative to litigation. To save clients time and money, JAMS has instituted new procedural options that allow the crafting of a process that is commensurate with the dispute. With JAMS new Optional Expedited Arbitration Procedures, parties can choose a process that limits depositions, document requests and e-discovery.

When parties utilizing JAMS Comprehensive Arbitration Rules elect to use these procedures, they agree to the voluntary and informal exchange of all non-privileged documents and other information relevant to the dispute.

To read more about JAMS procedures, here is an article .

Meet some lawyers on our platform

Brad H.

3 projects on CC
View Profile

Donya G.

31 projects on CC
View Profile

Ashley H.

19 projects on CC
View Profile

Richard N.

31 projects on CC
View Profile

Examples of Arbitration

Following are some examples of various types of arbitration.

Patent Arbitrations

  • A patent license dispute
  • Biotech/pharma dispute
  • Medical device relating to a patent arbitration

Trademark Arbitrations

  • Trademark coexistence dispute
  • Technology licensing agreement
  • Software trademark arbitration

Copyright Arbitrations

  • Context of film co-production agreement
  • Determination of licensing terms
  • Broadcast rights distribution arbitration agreement

IT Arbitrations

  • Banking software dispute
  • IT/Telecom dispute
  • Telecom Infrastructure dispute

Other Commercial arbitrations

  • Distribution Agreement
  • Solar Technologies
  • Artist promotion dispute
  • Breach of contract

Here is an article about five arbitration cases that you should know about.

What is Arbitration Used For?

Civil court lawsuits and trails are the traditional method of resolving disputes, such as accident and injury disputes. The rising litigation costs, court congestion and delays, and the negative psychological and emotional impact of litigation have increased the use of arbitration.

Simply speaking, arbitration is used to resolve disputes outside of courts in both the private and public sector. Arbitration is the most formal alternative to litigation and generally saves time and money because it is usually less expensive and faster than litigation. In this process, the disputing parties present their case to a neutral third party, who renders a decision.

Under the traditional arbitration model, parties voluntarily participate in the arbitration process. Their participation may be the result of a preexisting contractual provision or an agreement that occurs after the dispute has arisen.

Arbitration agreements generally provide a means for selecting the arbitrator or panel of arbitrators, the format of the hearing, the procedural and evidentiary rules to be used, and the controlling law.

Arbitration vs. Mediation

The process used to solve a conflict is the main difference between mediation and arbitration. Both arbitration and mediation will help you solve a legal issue outside of the traditional court process, but they use two different methods to do so.

  • Arbitration : typically, a legally binding process that replaces the full trial process with multiple (often three) chosen people to serve as judges in your case.
  • Mediation : typically, a non-legally binding process generally conducted with a single mediator who does not judge the case but facilitates discussion and eventual resolution of the dispute.

Arbitration is generally conducted with a panel of multiple arbitrators who take on a role like that of a judge, make decisions about evidence and give written opinions (which can be binding or non-binding).

Arbitration and mediation are similar in that they are alternatives to traditional litigation, and sometimes they are used in conjunction with litigation. Both arbitration and mediation employee a neutral third party to oversee the process, and they both can be binding.

Mediation can be used for any kind of dispute. Pre-lawsuit mediation is becoming more widely accepted as a sensible way of resolving disputes before they turn into litigation. Besides being confidential and non-binding, mediation is relatively quick and inexpensive compared to litigating a dispute.

If you want to avoid the high cost of litigation, you might want to consider arbitration. You can speak to arbitration lawyers that can assist you with the dispute that needs to be resolved to find out the best route to take.

Here is an article for more information relating to the difference between arbitration and mediation.

Get Help with a Dispute

Do you need help resolving a dispute and interested in the arbitration process?

Post a project in ContractsCounsel’s marketplace to get free bids from lawyers to help. All lawyers are vetted by our team and peer reviewed by our customers for you to explore before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

ContractsCounsel verified
Principal
9 years practicing
Free Consultation

Brad is a business attorney with experience helping startup and growing companies in a variety of industries. He has served as general counsel for innovative companies and has developed a broad knowledge base that allows for a complete understanding of business needs.

ContractsCounsel verified
Attorney
14 years practicing
Free Consultation

I am an attorney located in Denver, Colorado with 13 years of experience working with individuals and businesses of all sizes. My primary areas of practice are general corporate/business law, real estate, commercial transactions and agreements, and M&A. I strive to provide exceptional representation at a reasonable price.

ContractsCounsel verified
Partner
4 years practicing
Free Consultation

Chris Sawan is a JD/CPA who practices in the area of business law, contracts and franchising in the State of Ohio.

ContractsCounsel verified
Contracts Specialist
12 years practicing
Free Consultation

As an experienced contracts professional, I offer an affordable method to have your contracts reviewed! With my review of your contract, you can understand and reduce risks, negotiate better terms, and be your own advocate. I am an Attorney, Board Member, and Freelance Writer with a Bachelor of Arts degree, magna cum laude, in Film, Television and Theatre (“FTT”) from The University of Notre Dame. I was awarded The Catherine Hicks Award for outstanding work in FTT as voted on by the faculty. I graduated, cum laude, from Quinnipiac University School of Law, where I earned several awards for academics and for my work in the Mock Trial and Moot Court Honor Societies. Additionally, in my career, I have had much success as an in-house Corporate Attorney with a broad range of generalist experience and experience in handling a wide variety of legal matters of moderate to high exposure and complexity. My main focus in my legal career has been contract drafting, review, and negotiation. I also have a background in real estate, hospitality, sales, and sports and entertainment, among other things.

ContractsCounsel verified
Attorney
10 years practicing
Free Consultation

Elizabeth is an experienced attorney with a demonstrated history of handling transactional legal matters for a wide range of small businesses and entrepreneurs, with a distinct understanding of dental and medical practices. Elizabeth also earned a BBA in Accounting, giving her unique perspective about the financial considerations her clients encounter regularly while navigating the legal and business environments. Elizabeth is highly responsive, personable and has great attention to detail. She is also fluent in Spanish.

ContractsCounsel verified
President
14 years practicing
Free Consultation

Abby is an attorney and public policy specialist who has fused together her experience as an advocate, education in economics and public health, and passion for working with animals to create healthier communities for people and animals alike. At Opening Doors PLLC, she helps housing providers ensure the integrity of animal accommodation requests, comply with fair housing requirements, and implement safer pet policies. Abby also assists residents with their pet-related housing problems and works with community stakeholders to increase housing stability in underserved communities. She is a nationally-recognized expert in animal accommodation laws and her work has been featured in The Washington Post, USA Today, Bloomberg, and Cosmopolitan magazine.

ContractsCounsel verified
General Counsel
7 years practicing
Free Consultation

First in-house counsel for small TX-based company operating in the Middle East. Experienced with drafting, revising, and editing a variety of domestic and international contracts.

ContractsCounsel verified
Attorney
8 years practicing
Free Consultation

Matan is an experienced M&A, corporate, tax and real estate attorney advising closely held businesses, technology start ups, service businesses, and manufacturers in purchases, sales, and other exit strategies. Matan works with founders and first-and-second generation owners to strategically transition businesses.

ContractsCounsel verified
Attorney
14 years practicing
Free Consultation

I am a business law attorney with over 10 years’ experience and a strong background in information technology. I am a graduate of the University of California Berkeley, a member of the Illinois bar and a licensed lawyer (Solicitor) of England and Wales. I actively partner directly with my clients or indirectly, as Of Counsel, to boutique law firms to streamline business practices and manage legal risks by focusing on essentials such as - business contracts, corporate structure, employment/independent contractor agreements, website terms and policies, IP, technology, and commercial related agreements as well as business risk and compliance guidance.

ContractsCounsel verified
Transactions Attorney
23 years practicing
Free Consultation

Engaging Transactions Attorney with extensive experience in commercial real estate / project finance that possesses a winning blend of subject matter expertise, skill in client relationship management, and practical experience. Leverages a unique mix of legal, strategic, and analytical expertise, consistently meeting and surpassing client expectations. Specialties: Commercial Real Estate Law, Contract Negotiation, Procurement, Lease/Buy/Sell Transactions, Business Consultations, Team Leadership, and Economic Development

ContractsCounsel verified
Principal
3 years practicing
Free Consultation

Miami-based duly licensed attorney and customs broker with significant experience in various types of supply chain business agreements, as well as experience in entertainment law.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call