What is Arbitration?

Arbitration is a method of alternative dispute resolution (ADR). It is used to develop mutually agreeable settlements between opposing parties rather than filing a lawsuit and taking the case to court. However, both parties must agree to arbitrate rather than going to trial.

The arbitration is resolved by one or more impartial arbitrators. Both parties agree the arbitrator’s decision will be final and legally binding. At the end of the arbitration, the arbitrator gives the arbitration award, a legally binding settlement that is enforceable in court.

Many different types of disputes can be settled in arbitration. However, arbitrations are most commonly used for commercial disputes, particularly international trade agreements. These disputes are settled with international arbitration, which has its own distinct rules.

International Arbitration

When the parties in an arbitration are from different countries, it can be considered an international arbitration. International arbitration follows its own non-country specific rules and standards of ethical conduct, separate from the domestic arbitration of the country where the arbitration is taking place.

Most countries that participate in significant international trade and economic transactions follow the laws ratified at the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention of 1958. Under the New York Convention, if a party in an international arbitration files a lawsuit that breaches the arbitration agreement, the court must halt further legal proceedings. The rules of the United Nations Commission on International Trade Law (UNCITRAL) Arbitration also apply to international arbitrations.

Steps in the Arbitration Process

1. Initiation- One party of a dispute sends a letter to the opposing party requesting that the disagreement be settled in an arbitration.

2. Appoint arbitrators- There are three different ways arbitrators can be appointed:

• Arbitrators can be appointed directly by the two parties.

• Arbitrators that are already part of the arbitration can appoint additional arbitrators.

• An external party, such as the court, can nominate arbitrators.

3.  First meeting- The arbitrator, parties, and their legal counsel meet to discuss the dispute and set up an appropriate process and timetable.

4. Statement of claim- The party making the claim provides a summary of the dispute and the remedy they are seeking. The statement of claim informs the respondent of the alleged facts, but it does not include evidence.

5. Statement of response- The recipient of the statement of claim either admits or denies the claims. They may also present a counter claim, which needs a reply from the claimant.

6. Discovery and inspection- Each party provides a list of documents relevant to the arbitration. Then, both parties view the documents and agree on which documents should be given to the arbitrator.

7. Present evidence- The evidence is written down and given to the arbitrator to review before the hearing.

8. Hearing- Both parties give their case to the arbitrators. Each party can be present while the other side states their claim. During the hearing, the arbitrators question witnesses and can ask for clarification on any information.

9. Legal submissions- Both parties’ lawyers give the arbitrator a summary of their evidence. This can either be provided orally at the meeting or it can be put in writing once the hearing ends.

10. Arbitration award- After considering all the claims and evidence, the arbitrator makes a decision. An award summarizes the case, provides the final decision, and gives a reason for the decision.

Advantages of Arbitration

• Arbitration is usually heard sooner and resolved quicker that litigation in court.

• In court, the parties are assigned a judge. In arbitration, the parties can choose one or multiple arbitrators. This is especially helpful when the arbitration is highly technical. Parties can choose arbitrators with expertise in the subject area to preside over the arbitration.

• Hearings can be arranged at times and places that are convenient to the arbitrators, parties, and witnesses.

• Arbitration hearings and agreements are confidential.

• Arbitration rewards are often easier to enforce in foreign countries than court verdicts due to the provisions in the New York Convention of 1958.

Disadvantages of Arbitration

• One or both parties pay for the arbitrator, while the courts provide a judge for free. However, overall arbitration is usually less expensive than litigation.

• In some situations, the arbitration is binding. This means parties yield their rights to let the decision be decided in court.

• Usually, arbitration is resolved faster than litigation. However, if there are multiple arbitrators it can be difficult to schedule hearing dates where they are all available.

• Obtaining evidence by means of discovery is more limited in arbitration than in court litigation.

• It is difficult to overturn decisions made in an arbitration, even if the decision is erroneous.

• Arbitration awards are not directly enforceable, unlike judgements in court. If a party would like to enforce an award, they need to use an action, a type of judicial remedy, to confirm the award.

Should there be a court reporter at an arbitration?

A court reporter is not required at an arbitration. But, having a record of the arbitration can prevent the arbitration from turning into litigation. Although an agreement may be reached in an arbitration, sometimes the opposing party will still decide to go the court. This could be due to a miscommunication about the agreement or the opposing party wanting to reach a better outcome.

With a court reporter transcribing a verbatim record of the arbitration, you have an exact record of what was agreed upon. Without a court reporter, you or the opposing party could forget or misunderstand the details of the settlement.

How having a court reporter keeps you safe

Review the Transcript

If a miscommunication occurs between you and the opposing party, you and your lawyer can read the court reporter’s complete account of the arbitration. With the transcript, you can figure out what was misheard or misunderstood during the proceedings.

Review Agreements

In some situations, the opposing parties might try to alter the agreement by arguing what was decided during the arbitration. By having a complete transcript of the arbitration, you can show exactly what was said and agreed upon.

File an Appeal

If you believe your rights were violated during the arbitration process, you will want to go to court to appeal the decision. Without an accurate transcript, you may not have the evidence you need to go forward with your claim and your case could be dismissed.

International Court Reporters

Whether your arbitration is taking place in the United States or abroad, hiring a court reporter provides your party the protection you need. Planet Depos is an international court reporting agency that provides transcriptions for arbitrations around the world. We use the latest technology to create accurate transcriptions in real-time. Our editors produce final transcripts within three hours after the arbitration, so you will have an complete record whenever you need it.