Why Arbitration Is Good for Business Disputes
Dispute resolution is something that businesses today should know about. It is necessary for a business to be ready with dispute resolution before entering any kind of agreement. IF you have a dispute with another company, resolving it can cost your money, time and your energy. With proper planning, however, financial risk is reduced, and the business will be better positioned to resolve the dispute favorably and lessen the financial exposure. The business that understands dispute resolution is better prepared to direct its counsel.
There are various methods used for dispute resolution of businesses today. This includes voluntary negotiation and settlement or work-out, court litigation in state or federal courts, mediation, or arbitration.
IF two parties are signing an agreement and they have decided that arbitration is the best method of any dispute resolution, then this should be specified in the agreement. After negotiation, the contract will insert a typica; arbitration clause. IN arbitration, the parties vest the resolution of the dispute with arbitrators. If a decision is not favorable to the losing party, it can be brought to court for enforcement. Awards given by the arbitrator are enforced by all state and federal courts.
If parties agree in writing that disputes will be resolved by arbitration, this has important implications.
Any dispute can be resolved by an arbiter. With an arbiter, one party cannot do delay tactics so that his payment obligations can be extended.
Both parties should automatically incorporate a complete set of rules of informal procedure used commonly to resolve similar disputes, if the name of the arbitration organization that will supervise the arbitration is included in the agreement.
The location of the dispute resolution proceedings is agreed upon.
The parties select experienced arbitrators who will decide the matter. arbiters should have expertise and experience in the are of the business. Arbitrators that have experience in construction disputes can be an arbitrator for a dispute between two constriction companies. This holds for any type of disputes including commercial disputes, employment disputes, labor disputes, maritime disputes, and others.
Most arbitrators are experienced and vetted adjudicators. They will take time to hear the evidence and decide the dispute in a more informal procedure than court litigation. Dispute resolution by arbitration can be done by one or three arbiters. When there are three arbitrators in a panel, it would definitely take more time in procedure and cost more.
IN arbitration, the discover procedures are limited so this saves parties time and money.
Parties can agree that the costs and attorney’s fees will be assessed by the arbitrators against the losing party. This is beneficial and encourages early settlement discussions.
Arbitration hearings are much more informal than court proceedings. In arbitration, the rules of procedures used and required by law and the formal rules of evidence do not bind the arbitrators.
Arbitrators decide and do not settle or mediate disputes. They simply hear the evidence, the view of the parties, and make a final and binding decision.