Arbitration is a form of alternative dispute resolution, which uses a third party or a panel to make a decision regarding a dispute, and can be court ordered or voluntary. Arbitration is different from mediation, because a decision is made, which is why lawyers and clients must be cautious in agreeing to arbitration. Alternative dispute resolutions are typically preferred, as they are faster and more cost effective than litigation. Arbitration also helps to avoid hostility between parties, as well as being flexible, private and providing simplified rules of evidence and procedure.
Following an agreement to continue with the process of arbitration, both parties may need to agree on certain aspects, such as using a single neutral arbitrator or a panel. Once the procedural elements are agreed upon, the parties may proceed to arbitrator selection. Fortunately, parties are able to choose arbitrators that specialize in areas relevant to their dispute, to obtain the best results. Forward to the hearing, which is less formal than litigation, both parties will present their evidence prior to arbitrator deliberation. Finally, the arbitrator(s) will make a decision and dictate an award, which will be considered binding and not allow for appeal. The parties are required by law to agree to terms determined by the arbitrators’ decision, though the courts will review the case and decision to guarantee there was no misconduct throughout the process.
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