Resolving a Dispute
What is Arbitration?
Arbitration is a formal dispute resolution process governed by the Commercial Arbitration Act 2010 NSW (or the equivalent in other states) in which two or more participants refer their dispute to an independent third person (the arbitrator) for determination. Providing that the arbitration is conducted according to the principles of natural justice its procedures may be varied by the participants to suit the size and complexity of their dispute. A small case, for example, may be heard on the basis of documentary submissions alone which can reduce its costs significantly. Other more complex cases may benefit from a judicial style hearing in which formal claims and defences are lodged, evidence is put forward by each participant and tested by cross-examination etc. The result of the arbitration, known as the Award, is enforceable in the same manner as a Court judgement.
Note that the process described here is “commercial” arbitration rather than the more commonly known “industrial” arbitration which is a more narrowly based process concerned predominantly with matters of wages and conditions of employment.
Commercial arbitration in Australia has become the preferred procedure for participants seeking a binding determination of their dispute and an alternative to Court based litigation. Under the direction of a qualified arbitrator, it is an expedient, private and efficient method of dispute resolution.
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When should arbitration be considered?
Arbitration should be selected as the preferred process for dispute resolution when participants require defined procedures that are a subset of those available in Court but without the delays, public access or formality. Arbitration also enables the dispute to be adjudicated upon by a tribunal familiar with the professional or technical background of the matters in dispute.
When using arbitration as the process for resolving a dispute, participants are able to select an arbitrator with particular expertise and commercial experience in the subject matter of the dispute. The nominee arbitrator will then typically call a preliminary conference with the parties to agree procedural guidelines for that arbitration. This process thus provides a customised, specialist tribunal which facilitates a more efficient, effective and acceptable outcome.
The selection of arbitration as a dispute resolution procedure is a question which participants (and their legal representatives) should address at the time of entering into commercial contracts, so that an appropriate agreement can be included in the terms of the contract (an “arbitration clause”). Alternatively, an agreement to submit disputes to arbitration can be made by the participants after a dispute has arisen.
Arbitration should always be considered by participants in relation to commercial contracts to enable their disputes and differences to be resolved;
- efficiently and quickly,
- with privacy and confidentiality,
- in a final and enforceable way, and
- in accordance with the law and each party's rights.