Arbitration is a form of private adjudication process that uses a skilled, private decision-maker—the arbitrator—to decide a dispute, usually in the context of a private setting, instead of an open public courtroom. Resolution by arbitration is often considered advisable in business and commercial situations, and is often stipulated in formal business contracts. There are numerous reasons why parties in business wish to have their differences resolved out of the public eye or according to processes that can be much more flexible than those available in the public court system.
Like mediation, arbitration offers several advantages over the traditional, court-based litigation process:
Privacy & Confidentiality Arbitrations are strictly private proceedings, and arbitration awards are not published.
Flexibility The parties to an arbitration can tailor the process to their own particular needs and schedules.
Speed & Efficiency The speed and efficiency with which arbitrations can be started and achieve resolution are very important factors, especially in business situations where delays can be costly. While the parties pay for the cost of the arbitration, the streamlined process and timely resolution can save expense and other intangible costs in the long run.
Finality Arbitration decisions are final and binding, and court appeals are rare.