Benefits of Arbitration:
Arbitration is the submission of a dispute to one or more impartial persons for final and binding determination. Court intervention and review are limited by applicable state or federal arbitration laws; award enforcement is facilitated by those same laws.
Stipulations may also be made regarding the confidentiality of proprietary information, evidence, locale, number of arbitrators, and issues subject to arbitration. The parties may also provide for expedited procedures, if hearings must be scheduled on short notice or if awards must be rendered quickly.
Additional benefits of arbitration include the following:
· It is a private process with no public record of the proceedings.
· Extensive discovery can be avoided in favor of limited exchange of documents, witness lists, and depositions appropriate to the particular dispute.
· There is no backlog, as hearings are scheduled as soon as the parties and the arbitrator are available.
· Arbitrators with expertise and training in the dispute’s subject matter may be selected.
· Because of limited discovery, informal hearing procedures, and the expedited nature of the process, parties save on legal fees and transactional costs.
· Arbitration is less adversarial and more informal than litigation, making it more likely that the parties can continue a business relationship.
Parties may agree to arbitrate disputes by inserting a future-dispute clause in an engagement letter or contract, such as the following:
Any controversy or claim arising out of or relating to this contract or engagement letter, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association under its Arbitration Rules for Professional Accounting and Related Services Disputes and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
Arbitration has been popular in foreign countries, particularly in U.S.A Canada, New Zealand, Malaysia, because of the advantages of this system are as follows:
· Since it is established by the parties themselves, arbitration has the particular advantage of bringing the dispute settlement procedure sown to the level of the parties to the dispute.
· Since arbitration is established by agreement, it is more flexible than other procedures and can be adjusted to the views, desires and experience of the parties and to the circumstances obtaining in the undertaking and industry.
· This procedure, operating at the level closest to the parties to the disputes, has the advantage of enabling the arbitrators to acquire much greater familiarity with the characteristics of the particular industry or undertaking than most courts or tribunals.
· The procedure is relatively expeditious when compared to that in ordinary courts or Labour Tribunals. Ii cuts down delays and results in a prompt settlement of differences.
· It is informal in character because the disputes are handled by the parties themselves, often without recourse to lawyers. Arbitration, therefore, is less expensive than other procedures.
· Awards are capable of implementation without any grudge on the part of both the parties to the dispute and do not lead to further chances of litigation.
· Since arbitration is based on the consent of both the parties, it helps build up a sound base for healthy industrial relations, mutual understanding and co-operation.
· It is popular because it is suitable and compelling. It is far better than a costly work stoppage, even though not wholly satisfactory from either parties point of view.
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