Arbitration agreements are legal contracts that specify how disputes between parties will be resolved outside of court. In today`s business world, these agreements have become increasingly common due to their efficiency and cost-effectiveness. However, it`s important to understand the different methods of arbitration so that you can choose the one that best suits your needs.
First, there is ad hoc arbitration, which is also known as “non-administered arbitration.” This method allows parties to agree to the arbitration process and select their own arbitrator(s). This approach tends to be less expensive and less formal than other methods, but it can also be less predictable. Parties must agree upon all procedural details and may struggle to resolve disputes if they cannot agree on every point.
Second, there is administered arbitration, which is overseen by a third-party organization. The organization manages the process and provides rules and procedures for conducting the arbitration. This method is more formal and structured, ensuring that the arbitration proceeds smoothly and as impartially as possible. The organization managing the arbitration may also provide resources that parties may need, such as arbitrator lists and hearing facilities.
Third, there is expedited arbitration, which is designed to quickly resolve disputes. This approach is ideal for when parties need to resolve a dispute in a timely manner, and is usually less formal than other methods. Expedited arbitration may be used in situations where parties are unable to agree on all aspects of the dispute resolution process.
Finally, there is appellate arbitration, which is used when parties want to appeal an arbitrator`s decision. This method enables parties to request that the appellate arbitrator review the decision of the initial arbitrator(s). Appellate arbitration is only used in certain types of disputes, such as those involving complex commercial issues, where parties may need an additional layer of review.
When it comes to drafting an arbitration agreement, parties should keep in mind the type of dispute that may arise and the time and cost constraints that they may face. Choosing a suitable method of arbitration is essential in ensuring that the resolution process is efficient and effective. By understanding the different methods of arbitration, parties can make informed decisions that will help them achieve the desired outcome.