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The Definition of Arbitration Episode 2
Arbitration’s foundation is the parties’ will. Signing the arbitration agreement, parties devolve their dispute to a third person that will issue a binding and final decision.
Arbitration is usually chosen because it is more versatile compared to court litigation due to the possibility for parties to customize the entire proceedings; while in court litigation, they are not allowed to choose the judge or the law applicable. In this regard, arbitration allows parties to appoint one arbitrator or a panel of arbitrators. Parties are also free to agree on different requirements or qualifications that arbitrator must possess. It could happen that parties cannot reach an agreement on arbitrator’s name; in this case, the arbitrator will be appointed by an arbitral institution or a court depending on the rules applicable to the proceedings. The law applicable to the matter in dispute is also in the availability of the parties. Contrary to what happens in court, arbitrators are not bounded by the use of the law, they can also use other sources to solve the dispute, i.e. rules of law.
Once arbitrators decide the dispute, they render an award that is final and binding for the parties. Arbitration is considered time-saving because it does not have an appeal mechanism against the award. Arbitration also lacks enforcement power, it requires the help of a court to execute the award. Parties, looking to challenge the award have two choices, setting aside the award or challenge its recognition and enforcement. Both of these proceedings have to be conducted in the court, while the only difference lies in where the award was made or the enforcement is sought.
