Contract Arbitration To Resolve Breach Of Contract Disputes

Contracts are the bones of a business transaction, to mis-state it in layman’s terms; they are the conditions under which the parties are bound in a transaction. Arguments arise when one party feels the other side is not holding up their end of the contract, and vice versa. Up to now, those types of breach of contract disputes were litigated in traditional court. However as the process has grown popular, arbitration has also become a preferred mechanism for resolving such disputes because it is quick, it takes place behind closed doors, and is more flexible (to a degree).



What Contract Arbitration Entails



Arbitration (dispute resolution) Arbitration is a form of alternative dispute resolution (ADR) where two parties are in disagreement and agree to a third party arbitrator hearing the dispute, review any documents and evidence presented by the parties, and then issuing a decision. The decision of the arbitrator, known as an award, is usually contractually binding like a court judgment. What is arbitration in a company contract dispute, aside from a better way to make sense of your terms, review supposed breaches, and discuss remedies?



Strengths of Arbitration over Court



Efficiency and Speed: Litigation can be a long process with numerous hearings, appeals, and formalities that can go on for years. Conversely, arbitration is designed to be faster. Timelines are set by Arbitrators and hearings are scheduled as soon as possible depending on when both parties and the arbitrator are available to facilitate a quicker resolution.


Affordability: Arbitration can be expensive, with arbitrator fees and administrative charges another high cost, but generally the overall cost of arbitration is cheaper than the costs incurred by litigation. A much-shortened timeline and lower legal fees also make arbitration much more cost-effective.


Confidential: Unlike courts which soon docket public records, arbitration is almost completely confidential. Privacy: Arbitration involves mediation because a form of alternative conflict resolution is taking place out of court, whereas court proceedings are public. This privacy is of particular importance in commercial transactions which one of the parties does not intend to disclose their sensitive information. exposed revealed open public uncovered unveiled.


Arbitrators with knowledge in the field: Arbitrators are generally appointed based on their knowledge of the field at issue, so they have a better judgment on the variables present for the decision. This is especially powerful in complex conflicts where technical or industry expertise is critical.


Flexibility Arbitration permits the parties to “tailor” the conduct of the proceedings to their particular needs and sensibilities, including their choice of applicable laws, procedural rules, and the very language in which you are permitted to argue your case.



The Arbitration Process



Arbitration: Arbitration starts by way of the Partition between the parties to settle their disputes via arbitration. One hypothesis is that it is stipulated in the original contract through an arbitration clause or agreed upon after a dispute arises. A typical process is as follows:


Initiation of the arbitration: This takes place when one of the parties informs the other that intends to enter to arbitration according to the rules previously agreed.

Arbitrator Selection: Parties to an arbitration proceeding appoint one or more arbitrators by mutual agreement or through an appointing authority.

Preliminary Meeting: A preliminary meeting that sets the arbitration timetable, procedural issues, and the detailed questions to be resolved.

Communication: The parties must exchange all relevant documentation and information necessary for the arbitration.

Hearings: It is in hearings that arbitrators make it possible for both parties to produce evidence, witness testimonies, as well as arguments.

The arbitrator (s) issue a final and binding decision based on the evidence and arguments presented.

Challenges and Considerations

Though arbitration provides many an advantage, it is not devoid of its own set of problems. Because even purchase prices can still be considerable, especially for complex cases involving several arbitrators and massive administrative expenses. Second, arbitrations are binding decisions, which further restrict the ground for appeal, potentially leaving parties in the lurch if the decision is thought to be flawed.



Arbitration thus provides a specific system to address breaches of contract by offering speed, secrecy, and such specialized jurisdiction. This post aims to explain the nature of arbitration, and the benefits of arbitration, and to assist parties in making more informed decisions to include arbitration clauses in their contracts as well as to approach disputes more effectively once they have arisen. With the ever-increasing complexity of commercial transactions, arbitration is very likely to continue to play a dominant role in the contractual dispute resolution space.

Leave a Comment

Your email address will not be published. Required fields are marked *