Arbitration is a way or a method to resolve disputes independently & privately instead of going to the Courts. Arbitration is one of the methods/tools of ADR [Alternative Dispute Resolution]. Arbitration is a procedure in which a dispute is submitted, by agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.
Why one shall prefer arbitration over litigation is because of the following reasons:
‘Delay defeats Equity’- unlike the other cases that undergo the lengthy procedure of laws, arbitration is time saving and speedy. As it is completely held in private with the consent of parties, the hearing of the case is much faster than any normal litigation.
As Arbitration is only initiated once the parties to a dispute have mutually consented to it. This gives a lot of liberty to the party to make choices for the place of arbitration, time & date of arbitration and even to choose the arbitrator for their case whose decision shall be binding on the parties. Also if the parties desire privacy, then the dispute and the resolution can be kept confidential.
An arbitration process generally saves a lot of money of both the parties other than going by the traditional way of litigation. The arbitration procedure is well recommended for mid time and huge business firm as there a lot of money and time is invested which can be saved. Arbitration is less expensive and economical.
4) Simple Procedures:
Other than hefty court procedures, Arbitration is Informal and avoids unnecessary formalities. As the parties are free to choose the laws by which they seek the resolution to the dispute, Arbitration is quick and reaches the amicable resolution.
5) Free Choice in Selecting Arbitrator:
Arbitration gives liberty to the parties to select an arbitrator for their case i.e. select a judge of their choice mutually who shall preside and hear the dispute and deliver a decision on the matter. This decision of the arbitrator is known as Arbitral Award which is of binding nature and thereby means there shall be no appeal, which brings finality in the dispute resolution.