When we hear the word arbitration, what comes to mind? Let’s find out below.
What is Arbitration?
Arbitration is a legally binding process agreed upon by disputing parties as a means of resolving their disputes. Arbitration is usually carried out by a tribunal, made up of one or three arbitrators chosen either by both parties and the arbitrary institution to which the parties subscribe.
It is a particularly appealing form of dispute resolution because of its neutrality (lack of a biased approach), its enforceability (its awards are internationally recognized), and party autonomy (the ability for parties to do as they please with regards to choosing their arbitrators, arbitrary processes and the likes).
Choosing the Right Arbitrators
Many things should be considered when deliberating on the choice of an arbitrator(s).
One will be the type of dispute needing arbitration. Another would be whether the chosen arbitrator(s) is/are specialized in that field, have the right legal qualifications, specific skills or personal abilities as well as technical expertise which would prove very useful in dispute resolution.
All these important factors are to be noted when making this choice. That is why parties should be proactive when drafting the terms of their contract and provide guidelines by which their arbitrators would be selected should a dispute ensue in the course of their partnership
The Arbitrary Process
Usually, before the arbitration process is commenced, there is an agreement by both parties on; which form the arbitration process is going to take, the rules to abide by, the venue, method of communication, choice of arbitrators among other factors.
At the start of the arbitral process, a document, requesting arbitration is sent from the claimant to the other party. The details of this document can be regulated by the rules of a particular arbitral institution to which the parties are subscribed, and it usually outlines the details of the dispute and the selected arbitrator from the party’s end who will participate in the case.
The other party is given a time interval in which to respond, and they also, are allowed their choice of an arbitrator, (If the rules by which their arbitration would abide, allows for more than one arbitrator).
Once the arbitrators are selected; here, it is worthy to note that, if more than one arbitrator is required, both parties are to choose their arbitrators, and then the selected arbitrators, are to jointly, select a third arbitrator as their chair. But, if only a sole arbitrator is required by their contractual agreement, then, the arbitral institution they are subscribed to would choose that arbitrator.
After the tribunal has been formed, the details of the dispute are then laid out. A timetable as well as the process by which the arbitration will take place must then be agreed upon by all involved, and the concluded result must be tailored to the dispute.
Guidance during arbitration
The arbitral process then kicks off.
Both parties will likely be asked to produce certain documents such as written submissions, which will then be supported by technical reports or statements of witnesses, as is required.
Most times, these documents are to be presented both to the tribunal and the other party- as per request. Oftentimes, a disagreement may break out over these submissions of documents, and that is why it is quite imperative for the parties involved to seek legal counsel early on, about how to proceed, to what extent to fulfil these requests for document obligations and how to both comply with them and manage the process effectively.
Arbitral hearings can occur multiple times before the tribunal and can usually span a few days, weeks or months, depending on the nature of the case. And it requires the legal counsel from both sides to present their case and also to cross-examine the other side’s testifiers as well as their experts.
This done, the next step is to await the arbitral award from the tribunal based on their judgment from the facts and evidence.
The arbitral award
After hearing from both sides of the case, and deliberating over the facts and evidence presented, the tribunal will then present its award, which will contain its verdict on the issue between the disputing parties.
This award determines the obligations of the disputing parties as well as their rights and is final except when challenged.
Challenging or appealing to an arbitrary award
An arbitrary award can be challenged based on different factors. Some of which are; the terms of the arbitral agreement, the rules of the arbitral institution being subscribed to and the arbitrary seat.
A tribunal’s decisions are rarely challenged. But and if the tribunal has conducted itself in an unseemly way, has made an error of law or has failed to answer certain questions it should have, then the parties can appeal to the court for the dismissal or revision of the arbitral award and proper determination.
Enforcing arbitral awards
This is one of the attractive benefits of arbitration, in that the arbitral awards issued are often recognized and enforced in almost all parts of the world without a need to revisit or review the case.
Enforcement of arbitral awards can vary depending on different factors. Some of which are:
– The jurisdiction wherein the enforcing of the award is sought
– The party’s status against whom the enforcing of the award is sought. For example, if it’s a state or a country, this might not be possible.
– The possibility of preventing the other party from selling out so as not to honor the arbitral award.
We have seen the breakdown of the arbitral process, how easy it can be, and how important it is to choose the right arbitrators, and consult legal counsel early on before the arbitral process to make good decisions.
Do you have any disputes that you are considering resolving through arbitration? Or you’re in the middle of one without a seeming headway? Why not call on our lawyers now for an initial consultation, and let’s get started on helping you resolve that dispute right away!