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Arbitration is a formal method of dispute resolution involving a third party neutral who makes a binding decision. The third party neutral (the 'arbitrator', 'arbiter' or 'arbitral tribunal') renders the decision in the form of an 'arbitration award'.[1] An arbitration award is legally binding on both sides and enforceable in local courts, unless all parties stipulate that the arbitration process and decision are non-binding.[2]
Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. In certain countries, such as the United States, arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts and may include a waiver of the right to bring a class action claim. Mandatory consumer and employment arbitration should be distinguished from consensual arbitration, particularly commercial arbitration.
There are limited rights of review and appeal of arbitration awards. Arbitration is not the same as judicial proceedings (although in some jurisdictions, court proceedings are sometimes referred as arbitrations[3]), alternative dispute resolution,[4] expert determination, or mediation (a form of settlement negotiation facilitated by a neutral third party).
- ^ Katia Fach Gómez and Catharine Titi, ed. (2024). The Award in International Investment Arbitration. Oxford University Press. ISBN 9780192872968.
- ^ O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice Hall. p. 324. ISBN 978-0-13-063085-8.
- ^ In the United Kingdom, small claims in the county court are dealt with by a procedure called "small claims arbitration", although the proceedings are held in front of a district judge, paid for by the state. In Russia, the courts dealing with commercial disputes are referred to as the High Court of Arbitration of the Russian Federation, although it is not an arbitral tribunal in the true sense of the word.
- ^ Although all attempts to determine disputes outside of the courts are "alternative dispute resolution" in the literal sense, ADR in the technical legal sense, is the process whereby an attempt is made to reach a common middle ground through an independent mediator as a basis for a binding settlement. In direct contrast, arbitration is an adversarial process to determine a winner and a loser in relation to the rights and wrongs of a dispute.