The object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense.
Arbitration gives the parties great freedom to agree on how their disputes are resolved, subject to some basic safeguards.
Essential features of the process are the reference of a dispute to arbitration, the privacy and confidentiality of the proceedings, a determination of the dispute and the finality of the decision, which is subject to very limited rights of appeal.
A further advantage is the widespread enforceability of arbitral decisions or ‘awards’.
The referral of disputes through an arbitration agreement can take the form of a contract to refer after the dispute has arisen, or an arbitration clause in an existing contract.
The process can give the parties the choice of arbitrator or the ability to influence the selection of the arbitrator. The flexibility of the process means that the parties can get a speedy decision if they need one.
In cross-border disputes arbitration is particularly attractive, enabling the parties to choose the applicable law, the location, the procedure and the identity of the arbitral tribunal.
Although there are some disadvantages to arbitration, such as the fees of the tribunal, the arbitrator can often counteract these, particularly by running the dispute in a pro-active manner which takes up far less time and costs less than court proceedings.