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What is Arbitration?

What is arbitration? 

Arbitration is a form of alternative dispute resolution, which can essentially be understood as a private alternative to litigation. It is based on all parties agreeing to arbitration with the resulting decision being final and binding.   

How does arbitration work and how is it different to litigation?  

Arbitration differs from litigation in that it is based on a contract and is formed by the parties agreeing to resolve their dispute with an agreement. Arbitration gives the parties a much wider scope to determine how the process will be run such as: 

  • The jurisdiction where the arbitration occurs, and this will usually be where the hearings are also held.  

  • What rules will govern the procedure.  

  • The parties can decide between them what format the arbitration process will take, for example, whether the meeting will be remote or in-person.  

  • Unlike court proceedings, the parties can choose where and when the arbitration will take place and agree a timetable to suit them. 

  • An arbitrator is appointed by the parties to sit in the place of the judge. They will be an impartial third party with experience and training in the relevant field.  

  • The parties must agree the scope of the powers that are to be afforded to them, which will be those that are required for the case to progress effectively, or otherwise be resolved.  

  • It is open to the parties to use arbitration to resolve the entire case, or simply a single element which is in dispute.  

  • Arbitration proceedings are usually confidential. 

The parties agree to be bound by any decision made by the arbitrator, just as they would by a court order. In this way it also differs from mediation.  

In a family matter, parties must select and jointly instruct an appropriate arbitrator from the Institute of Family Law Arbitrators. The IFLA is a combined initiative of family law and arbitration professionals which has adapted certain provisions of the Arbitration Act 1996 to be more suitable in the context of family law disputes.  

The parties must then sign and complete an Application for Family Arbitration Form, where they set out the details of the dispute that they are seeking to resolve through arbitration. In this form, the parties agree to be bound by any decision of the arbitrator. They also agree not to apply to the court while the arbitration process is ongoing.  

Each party will have the opportunity to present their case to the arbitrator, who will then reach a decision by applying the law of England and Wales. This decision will be delivered to both parties in writing and include reasons for it being made.  

If the arbitration is in relation to financial matters, then normally the parties need to request that the court make it into a binding order.  

Why choose arbitration? 

In many cases, arbitration can be a very attractive alternative to litigation. Parties are afforded greater flexibility and control over the process, which is adapted to suit their individual circumstances. Unlike other alternative dispute resolution options such as mediation, arbitration offers parties the same finality as a court hearing, with none of the associated delays.  

As a private process, with the arbitrator specially selected for their knowledge and experience in the specific area of dispute, parties will also benefit from a greater degree of focus and expertise than they may experience at court. The arbitrator will ensure that they have a thorough understanding of the case and can focus on details, which the court may not have time to consider. 

Arbitration generally is more cost effective than going through the courts. The timings can also be set to suit the parties rather than around the court time that is available.  

The information on this website is intended as a guide and does not constitute legal advice. Vardags do not accept liability for any errors in the information on this website, nor any losses stemming from reliance upon the statements made herein. All articles and pages aim to reflect the legal position at time they were published, and may have been rendered obsolete by subsequent developments in the law. Should you require specialist advice, tailored to your situation, please see how Vardags can help you.

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