It is important for businesses today to know how to resolve disputes. It is necessary for a business to be ready with dispute resolution before entering any kind of agreement. Dispute resolution can be expensive, time-consuming, and frustrating. If a business has properly planned dispute resolution, then it can lead to lesser risks and the dispute can be resolved favorably without losing much time and money. In order to better prepare the business to direct its counsel, it is important to understand the basics of dispute resolution.
Dispute resolution is done in many ways by businesses today. The four common methods used are voluntary negotiation and settlement or work-out, court litigation in state or federal courts, mediation, or arbitration.
Arbitration is specified in the agreement of two parties if this is the procedure that they want for dispute resolution. When the two parties have already negotiated, the arbitration clause will be included in the contract. IN arbitration, the parties vest the resolution of the dispute with arbitrators. They also agree that the award of the arbitration may be enforced by a court, if the losing party does not honor the award. Proper arbitrations awards are enforced by all state and federal courts.
Below are the implications of having arbitration as the method of dispute resolution by two parties.
Any dispute can be resolved by an arbiter. This reduces the possibility of delay tactics to stretch out payment obligations.
Both parties should automatically incorporate a complete set of rules of informal procedure used commonly to resolve similar disputes, if the name of the arbitration organization that will supervise the arbitration is included in the agreement.
There is also an agreement of where the dispute resolution proceedings will be held.
The parties select experienced arbitrators who will decide the matter. arbiters should have expertise and experience in the are of the business. IF the two parties in dispute are construction companies, then the arbitrator should have experience in construction disputes. This applies for any dispute in any field of business.
Most arbitrators are experienced and vetted adjudicators. The manner by which arbitrators hear the evidence and decide the dispute is more informal than court litigations. It is possible to have one arbitrator or three arbitrators to resolve the dispute. It would take more time and will cost more if there are three arbiters deciding the issue.
IN arbitration, the discover procedures are limited so this saves parties time and money.
Parties can agree that the costs and attorney’s fees will be assessed by the arbitrators against the losing party. This adds benefit and encourages settlement discussions at an early time.
Arbitration hearings are informal. There are not formal rules of evidence that binds arbitrators and they are also not bound by the rules of procedures used and required by law.
Arbitrators decide and do not settle or mediate disputes. They simply hear the evidence, the view of the parties, and make a final and binding decision.