Arbitration is an alternative to legal action in the courts, in order to settle an unresolved dispute.
It is legal
It is popular
It is easier than a judicial process
Arbitrator : The person appointed with agreement from the parties.
Arbitral tribunal: A group of arbitrators.
Award : The final decision of the arbitrator.
Predates formal courts
Elements of Valid Arbitration Agreement
The parties must be capable of entering into a legally binding contract,
The agreement, whenever possible, should be in writing.
It must be signed by the parties concerned.
Matters Clearly Stated
It must state clearly those matters which will be submitted to arbitration.
No Illegal Content
It must not contain anything that is illegal.
Criteria for selecting an Arbitrator
Arbitration can only take place if both the parties have agreed to it. Both the parties have mutually consult each other and agree on selecting an arbitrator(S). Unlike in judicial courts.
The arbitrator should be a neutral person. Independent from the parties. And should be biased towards one party or individual.
Qualified & Experienced
The arbitrator should be sufficiently qualified and experienced in the matter of dispute. He/She might not be having enough knowledge about the judicial matters.
Advantages & Disadvantages
Faster than action at law
Generally private. No bad publicity. Confidential!
Arbitrator is knowledgeable in the matter of dispute. Judges are not.
In case of arbitral tribunal, the process can be slow
Arbitrator may overlook the opinion of court
Criteria for the validity of award
It must be within the prescribed time set by the parties.
it must be legal and enforceable at law.
It must cover all the matters of dispute brought forward,
It must be the final verdict, that is it should settle all disputes.
It must be clear and not ambiguous.
It must address only the matters of disputes put forth in the proceedings and not anything else,
It should be in writing.
Conclusion “ Arbitration is a legal technique for the resolution of dispute outside the courts. The parties refer the dispute to a neutral, knowledgeable person (arbitrator or arbitral tribunal) who then gives the final decision (award) to which both the parties agree.”
Contractual Procedures in the construction industry edition 2 page # 303