Arbitration is the most advanced of the formal dispute resolution processes governed by Australian law. In Arbitration, disputing parties refer their dispute to an independent third party (the arbitrator), who determines an outcome based on the circumstances and information provided and then hands that outcome down to the disputing parties.
The arbitration process can be altered to suit the type of case being heard. For example, a small case could be heard on the basis of documentary submissions alone, which would significantly reduce the costs associated with the process. For this reason, it is important that you obtain legal advice when deciding whether or not to engage in dispute resolution.
Arbitration is most commonly used to resolve industrial or commercial disputes, rather than civil disputes involving individuals. It is most useful when the disputing parties are in clear conflict with each other, for example, a dispute between a trade union and an employer or between two competing companies.
Arbitration is becoming increasingly popular for parties seeking a binding resolution to their dispute due to its nature as an efficient, expedient, and private method of dispute resolution.
When is Arbitration most useful?
Arbitration should be considered when parties require a set of procedures, such as those found in court, but without the formalities, delays, and costs associated with litigation. Arbitration also allows for a dispute to be heard by an arbitrator or tribunal that is specifically chosen based on their knowledge or experience in the area of dispute.
Parties are able to nominate an arbitrator, who will then call a conference with the parties to determine a set of procedures and guidelines for the arbitration of their dispute.
Arbitration should be considered by parties to contracts before a contract is even entered. If an arbitration clause is included in a contract, it would require the parties to participate in arbitration should a major dispute occur. This lowers the likelihood of costly and prolonged legal action arising from any contractual disputes.
Key Benefits of Arbitration include:
- Efficiency and speed with which a dispute can be resolved;
- Confidentiality and privacy in all arbitration proceedings;
- A result obtained through arbitration is enforceable and considered final.