Arbitration is a form of Alternative Dispute Resolution (ADR) in which parties agree to submit their dispute to a neutral third party, known as an arbitrator, who will make a binding decision on the dispute.
In arbitration, the parties have more control over the process and the decision than in litigation, but less control than in mediation. The arbitrator is typically an expert in the subject matter of the dispute and is chosen by the parties or appointed by a court or an arbitration institution.
Arbitration can be either ad hoc or institutional. Ad hoc arbitration means that the parties agree on the procedure for the arbitration themselves. Institutional arbitration means that the parties use an established arbitration institution that has its own set of rules and procedures.
The arbitration process typically begins with the parties agreeing to arbitrate their dispute and selecting an arbitrator or a panel of arbitrators. The arbitrator(s) will then set out the rules and procedures for the arbitration, including the submission of evidence, the timing of the hearing, and the issuance of the decision.
During the hearing, the parties present their evidence and arguments to the arbitrator, who will then issue a final, binding decision on the dispute. The decision is typically enforceable in court.
Arbitration can be a useful way of resolving disputes, particularly in commercial disputes where the parties may prefer to keep their dispute confidential and have more control over the process and the outcome. However, it can be more expensive than other forms of ADR, and the decision of the arbitrator is generally final and cannot be appealed on the merits.
Many jurisdictions have implemented legislation and regulations that encourage or require parties to consider using arbitration before resorting to litigation, particularly in international commercial disputes.
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