In this globalization era, the world starting to change more and more in the way we live our life. Not only does it change our personal lives, but also the professional industry. We frequently hear a slew of concerns from petitioners or plaintiffs in specific cases about the legal fees being excessively expensive, the cases were settled after quite a number of trial sessions, or the judge did not offer them adequate solutions.
However, since the introduction of alternative dispute resolution, we now can see a dramatic reduction in such complaints from petitioners. Arbitration has become increasingly popular in commercial disputes and negotiations.
Ever wonder what is arbitration and how arbitration works? Well, in this article, we are going to provide you with information on arbitration and the types of arbitration.
What is arbitration?
Arbitration is a means of resolving conflicts between parties outside of the courts. It is an alternative to litigation. Simply explained, arbitration is a way of resolving a disagreement between two or more parties who had agreed to have their cases considered and decided by an independent tribunal. The arbitrators then will consider both sides of the argument and make a decision that can be enforced anywhere on every side of the world.
To put it another way, a party’s right to submit the disagreement to arbitration is contingent on the arbitration agreement between the party and the other claimants that the case may be brought to arbitration.
Arbitration is frequently a preferred method of resolving issues as it is cost-friendly and avoids any kind of acrimony of a more formal trial. On top of that, this method does not consume so much time for both parties. A single arbitrator a tribunal can determine disputes in arbitration.
When parties submit a disagreement to arbitration, that means they already agree to abide by the arbitrator’s decision, often known as an award. After each party sends in their testimonies and pieces of evidence, the award then will be made, and it has the same power to act as a written contract between both parties. The award becomes a judgment once it has been affirmed.
Types of arbitration
Unlike the traditional procedure of a judicial proceeding in a court, the parties now can save a lot of time by having an expedited arbitration hearing that is not formal and does not entail a judicial proceeding. There are two common types of arbitration;
- Domestic Arbitration
The term “domestic arbitration” refers to a dispute that is exclusively national or domestic in nature. To put it in other words, this means that all parts of the proceedings are linked to one jurisdiction in general. The arbitration procedures must take place in the same domestic territory and must follow the procedural and substantive laws of the same nation.
- International Arbitration
When it comes to international arbitration, unlike the domestic one, it will extend beyond the jurisdictional boundaries of one country. International arbitration, as the term implies, takes place outside of the domestic area. The circumstances of the parties’ disagreement will determine which law should be used in the dispute.