Arbitration

Arbitration is a private means of dispute resolution whereby the parties agree to be bound by the decision of an arbitrator of their choice whose decision is final and whose award has the legal force of a High Court judgment or order.

Areas where arbitration has proved especially effective include building and civil engineering contracts; shipping; imports; exports and international trade; foreign investment agreements; commodities trading; partnership disputes; insurance contracts; intellectual property agreements; and rent review in commercial leases. This list is not exhaustive, however, for almost any commercial dispute which can be resolved by litigation in court, can be resolved by arbitration, and there is a widespread increase in the use of arbitration generally.

With its flexible, less formal procedures and an emphasis on confidentiality, speed and reduction of costs, arbitration is the smart solution for domestic and international business dispute resolution.

For an arbitration to take place, the disputing parties must agree to take the dispute to arbitration. In practice, this agreement is often made before the dispute arises and is included as a clause (see ICLP Arbitration Centre Clause) in the commercial contract. In signing a contract with an arbitration clause, the parties are agreeing that their dispute will not be heard by a court but by a private individual or a panel of several private individuals. If parties have agreed to arbitration, they will generally have to go to arbitration rather than court, for , the court cannot ignore such agreement.

Advantages of Arbitration

The principle advantages of arbitration over other forms of dispute resolution (litigation included) are privacy; flexibility of procedure; the ability to use arbitrators who are experts in the field of dispute; cost effectiveness; and enforceability of the award both domestically and internationally. There is a growth in the use of arbitration as a means of resolving disputes both at domestic level and at international level.

Parties to all kinds of international contracts regularly favour arbitration as the only acceptable means of resolving their disputes because it promises independence from the national courts of the other party, among other advantages above mentioned.