What is an Arbitration Agreement?

Arbitration is an Alternative Disputes Resolution (ADR) procedure which is used primarily to resolve commercial disputes, especially those with cross-border elements. It is generally a quicker and cheaper option when compared with litigation, however, one of the key advantages is that as with a court order, an arbitration award is enforceable (although it can be challenged in court).

How can I ensure that I can send a dispute to arbitration?

Parties to a commercial contract can include an option to arbitrate a dispute by entering into an Arbitration Agreement which can be free-standing or form part of the wider commercial contract. The Arbitration Agreement confirms that certain disputes may be referred to arbitration and can be entered into after a dispute develops.

An Arbitration Agreement will set out:

• Will there be one Arbitrator or a panel of three?
• How the Arbitrator/s is selected
• Which jurisdiction the proceedings will be held in
• Will the arbitration be conducted using the rules of a recognised arbitral institution such as the International Chamber of Commerce (ICC), the Singapore International Arbitration Centre (SIAC), or the London Court of International Arbitration (LCIA))

Like all alternative dispute resolution methods, arbitration is voluntary. Therefore, there is little point in entering into an Arbitration Agreement if you have no plans to abide by the Arbitrator’s final decision.

What are the advantages of arbitration?

Arbitration has several advantages, including:

• The arbitration hearing and award are private and confidential
• Parties can choose the jurisdiction which is to govern the arbitration
• Parties can choose an Arbitrator based on their skills and experience
• There are several international conventions, including the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards which ensures that arbitration awards are recognised and enforced within contracting states
• Parties can agree on the arbitration procedure in advance to ensure it is suitable for the matter in dispute and can bring about a swift conclusion

 

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Entering into an Arbitration Agreement can have significant advantages for your business, especially if you are launching a cross-border initiative. Our dispute resolution solicitors can provide you with the advice you need to ensure any Arbitration Agreement you draft and/or sign protects your best interests. For a free 15 minute consultation, just click 'Get started' below.

 

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Additional resources

• What is dispute resolution
• What are the different types of business disputes
• Everything you need to know about settlement agreements
• Free Dispute Settlement Agreement template
• Legal advice on commercial and business mediation