Arbitration
Arbitration , in the law, is a legal alternative to the courts whereby the
parties to a dispute agree to submit their respective positions to a
neutral third party, the arbitrator, for resolution.
Generally, arbitration is used in a business-related dispute and usually
entails a fraction of the time and money of litigation. Both parties agree
to recognize an arbitration panel as a legal authority, and agree that the
decision is legally binding. If the losing party fails to pay the award
amount, the winner can transfer the decision to a court, which will
enforce the award judicially. Arbitration procedures are usually closed to
the public.
Either party to an arbitration may appeal the arbitrator's decision to a
court, however the court will generally not change the arbitrator's
findings of fact but will decide only whether the arbitrator was guilty of
malfeasance, or whether the arbitrator exceeded the limits of his or her
authority in the arbitral award or whether the award conflicts with positive
law. Some jurisdictions have instituted a limited grace period during
which an arbitral decision may be appealed, but after which there can be
no appeal.
Some domestic jurisdictions have stipulated that judges may require
either arbitration or mediation of certain disputes as a first step toward
resolution. This is often the case in family law, particularly child custody
cases.
To ensure effective arbitration and to increase the general credibility of
the arbitral process, arbitrators will sometimes sit as a panel, usually
consisting of three arbitrators. Often the three consist of an expert in the
legal area within which the dispute falls (such as contract law in the
case of a dispute over the terms and conditions of a contract), an expert
in the industry within which the dispute falls (such as the construction
industry, in the case of a dispute between a homeowner and his general
contractor), and an experienced arbitrator.
Arbitrators have wide latitude in crafting remedies in the arbitral
decision, with the only real limitation being that they may not exceed the
limits of their authority in their award. An example of exceeding arbitral
authority might be awarding one party to a dispute the personal
automobile of the other party when the dispute concerns the specific
performance of a business-related contract.
Mediation
In mediation, a neutral negotiator helps both sides negotiate a
settlement. Typically, the mediator meets with each side separately
until both sides agree to a settlement. Mediated settlements are usually
less costly than settlements resulting from litigation. Unlike arbitration,
mediation is non-binding; neither side has the power of the courts to
enforce the settlement.
Arbitration and Mediation
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