Arbitration provides parties with property or financial cases an alternative to litigation and judicial decision. Parties who wish to undergo arbitration will sign an agreement to arbitrate and will stipulate in the agreement the guidelines for arbitration. They will then have to pay a lawyer who will be acting as the arbitrator and will decide the case.
The process of arbitration may be simple or complex. If the parties want the process to be simple, they can opt for the “on the papers” process for which they will be submitting to the arbitrator an agreed statement of facts, balance sheets, financial documents and other pertinent papers. The arbitrator will decide on the written information that is put before him. The decision of the arbitrator is called the “award”.
A more complicated process of arbitration is where the parties file formal documents with the arbitrator who will conduct hearings and hear oral evidence. This process would take more time since parties would have to attend arbitration hearings and it may also prove to be expensive as compared to the “on the papers” process. Usually, hearings are appropriate in financial and property cases and for parties who can afford to pay for such a process.
There are two types of arbitration: court-ordered arbitration and private arbitration. In court-ordered arbitration, the parties have commenced proceedings in court and consented to have some or all of their issues submitted to arbitration. In private arbitration, the decision to resort to arbitration is the initiative of the parties.
There are both advantages and disadvantages to arbitration. A key advantage is the confidentiality of the proceedings and the issues. Parties may consent to make the rules of evidence not binding on the arbitrator who would make the proceedings more flexible, time and cost effective. However, the main advantage of arbitration is that the award is not binding upon the parties unless it is registered in court.
Even though an award is already registered in court, a party may still apply for a review or ask the court to set aside the award under the following circumstances:
The change in circumstances of the parties since the award or agreement was made has made it impracticable for some or all of the award or agreement to be carried out.