There are several types of arbitration that the public should know about. These include ad-hoc arbitration and institutional arbitration. There is also domestic arbitration and international arbitration. Our organization specializes in providing services for all these types of arbitration process. Please read below to learn about each type arbitration meaning. If you have questions, do not hesitate to message, email, or call our experts. We can supply you with any arbitration information that you need.
Keep in mind that almost any legal dispute can get resolved through arbitration. That’s because arbitration is a top go-to method for ADR. ADR stands for “Alternative Dispute Resolution.” Any ADR process replaces the traditional court trial setting. Arbitration is perfect for parties that have attempted to resolve issues. When a resolution is unsuccessful, anyone can arbitrate a dispute. During arbitration, a neutral arbitrator or panel presides over hearings. The arbitrators assess evidence and listen to testimonies. Then, the arbitrators make a binding decision that’s upheld by the US court system.
Voluntary & Mandatory Arbitration
Arbitration often gets triggered through a mandatory provision in a contract. The provision will state that any dispute must get resolved through arbitration. Different types of contracts feature unique arbitration clauses. This applies to business, consumer, and employee contracts. Some arbitration clauses are simple and straightforward. Others are more complex. A clause might feature provisions about who will select the arbitrator. That same clause might also state how an arbitrator gets selected. Then, a new clause could show where proceedings can take place. Some arbitration agreements demand that disputes get arbitrated through an organization. (Or an arbitration group.) Otherwise, parties can select any arbitrator that they desire.
Most parties agree to arbitrate a contract dispute before a dispute takes place. But sometimes parties can submit to arbitration once a dispute already happens. Say that a party refuses to adhere to an agreement to arbitrate. Or, a party challenges the validity of an agreement. The matter might get decided through a petition or motion to a US court. (As long as the court has jurisdiction.) Then, the court will review the agreement or contract. This way, the court can determine if mediation and arbitration is mandatory. Sometimes a court will decide that parties must resolve a dispute through arbitration. This can apply even if the parties haven’t agreed to arbitrate. That concept refers to “mandatory arbitration.” Otherwise, all other arbitral disputes go through the “voluntary arbitration” process.
Binding & Non-Binding Arbitration
Any mandatory arbitration decision functions in either a binding or non-binding manner. Say that arbitration is binding. This means the final decision will get enforced as a court judgment. Through binding arbitration, any decision an arbitrator makes becomes final. The decision (and award) cannot get appealed or revisited. The only exception is when unusual circumstances take place. This often means that the arbitrator has committed fraud or misused power.
Through non-binding arbitration, any party can reject the decision of the arbitrator. When this happens, the party can request that a court trial take place. The decision for arbitration to have binding or non-binding status is not a tough one. Most people (and companies) prefer binding arbitration. Otherwise, you risk having the other party reject your arbitral award. The average pre-dispute agreement defines whether arbitration is binding or not.
“Institutional arbitration” refers to a specialized arbitration institution getting appointed. That institution or organization then takes on a key role. It administers the entire arbitration process. An institution can also conduct arbitral case management. Every institution and organization has its own set of rules. The rules provide a crucial framework (like timelines) for filing documents. These rules might also include certain procedures that parties must follow. Our own organization can function as an forced arbitration institution. Please contact us today if you’d like to learn more information.
Oftentimes, working with an arbitration institution benefits both parties in a dispute. Here is an example. Many institutions now provide tribunal secretary services for parties. Having distinct arbitration rules in place makes the arbitral process move forward. This can save parties both time and money. The average institution will charge a fee based on the percentage of a disputed sum. That fee is sometimes large when major disputes take place. Otherwise, the arbitration fees should not break the bank.
Ad Hoc Arbitration
Now that you know about institutional arbitration, it’s time to learn about a related concept. On the opposite end of the arbitral process, you’ve got “ad hoc arbitration.” It refers to arbitration that isn’t administered by any institution. Parties get to figure out every aspect of the arbitration between themselves. This can refer to the appointment of an arbitrator. It also focuses on using certain rules and creating a timetable for filing documents.
Without an administering institution, ad hoc arbitration parties have a lot of freedom. They can use whichever arbitral procedure that they prefer. Say that a case does not feature agreed-upon arbitral rules. The arbitration tribunal will preside over arbitration in the manner that it prefers. Sometimes ad hoc arbitration converts into institutional arbitration. This happens when parties realize they need the help of a professional organization. Through an agreement, the parties will transition away from ad hoc Federal Arbitration Act.
Domestic & International Arbitration
The majority of arbitration cases in the US are domestic. But sometimes companies take part in international arbitration. Domestic arbitration refers to a dispute between two parties based in the US. International arbitration is when parties have cross-border conflicts. Most international disputes get arbitrated because of a contract. The contract points out that differences must get resolved through an arbitral panel. The international arbitration process has become easier for parties in recent years. Why? Because of advancements in technology. Nowadays, many parties can arbitrate country-to-country without having to travel. Disputes can get resolved through Skype, Zoom, and other video conferencing technologies.
An international binding arbitration contract might state that parties must adhere to certain rules. Oftentimes, the rules apply to a specific institution or organization. Many cross-border disputes get resolved through UNCITRAL arbitration rules. Others focus on the United Nations’ arbitration rules and procedures. Over 150 countries refer to the “New York Convention” guidelines. This way, there is a standard process to enforce almost all arbitration agreements.
More About Arbitration & the Types of Arbitration
Arbitration provision functions as a popular form of ADR: alternative dispute resolution. ADR is an outlet for people to resolve disputes away from US courts. Each dispute gets decided by at least one person. That person’s known as an “arbitrator.” More than one arbitrator gets referred to as “arbitrators” or “arbiters.” Many people also refer to these arbitrators as the “arbitral tribunal.” An arbitral tribunal will render an arbitration award. All types of arbitration function as a private process. The disputing parties come to a pre-arbitration agreement. They decide that one or several people can resolve the dispute. An arbitrator makes a final decision about each dispute. But only after viewing evidence and listening to arguments.
Arbitration is not the same concept as mediation. Why? Because a neutral arbitrator has the authority to make a final, binding decision. That is not the case when it comes to mediation. A mediator can only make a suggestion that both parties must agree on. Otherwise, there is no resolution. The arbitration process functions like a trial. The parties begin the process by providing opening statements. Then, they present evidence to an arbitrator during the hearings. Arbitration vs Litigation doesn’t last as long as almost all traditional trials do. It is also less formal of a process. In fact, parties can ignore certain state and federal rules about evidence. That’s a key reason why the arbitration process concludes faster than court trials.
Say that your arbitration hearing has concluded. An arbitrator (or tribunal) must now provide an award. An award can only announce the arbiter’s decision. This refers to the “bare bones” award. Or, an arbitrator can provide a series of reasons. In this case, the arbiter has provided a “reasoned” award. Once again, any arbitration process is either binding or non-binding. Say that you take part in binding arbitration. This means that the arbiter’s decision becomes final. It will get enforced by a US court on an immediate basis. Very narrow grounds exist to appeal a binding arbitration decision.
What Are the Stages of Arbitration?
Six main stages exist when it comes to the average arbitration process. We’ve listed the common arbitration stages below. Do you have questions about a certain arbitral stage? If so, do not hesitate to contact our arbitration experts. They can provide easy-to-understand information. Here are the six main stages of the arbitration process:
1. Initial pleadings.
2. Panel selection.
5. Trial prep.
6. Final hearing.
What Are the 4 Types of ADR?
Here are the three types of ADR. They are arbitration, mediation, adjudication, and conciliation. Please browse other articles on our website to learn more about the ADR process. If you have questions, you’re welcome to email, message, or call our experts. We can supply you with any information you need about arbitration and ADR.