Dispute resolution is something that businesses today should know about. Before entering into any agreement, it is wise to anticipate how to resolve disputes. You can spend a lot of money ,time, and get frustrated in the process of dispute resolution. With proper planning, however, financial risk is reduced, and the business will be better positioned to resolve the dispute favorably and lessen the financial exposure. The business that understands dispute resolution is better prepared to direct its counsel.
Dispute resolution is done in many ways by businesses today. Voluntary negotiation and settlement or work-out, court litigation in state or federal courts, mediation, or arbitration are the four common methods of dispute resolution for businesses.
IF two parties are signing an agreement and they have decided that arbitration is the best method of any dispute resolution, then this should be specified in the agreement. After negotiation, the contract will insert a typica; arbitration clause. arbitrators resolve the dispute in the process of arbitration. If a decision is not favorable to the losing party, it can be brought to court for enforcement. Awards given by the arbitrator are enforced by all state and federal courts.
If parties agree in writing that disputes will be resolved by arbitration, this has important implications.
Any dispute can be resolved by an arbiter. With an arbiter, one party cannot do delay tactics so that his payment obligations can be extended.
Both parties should automatically incorporate a complete set of rules of informal procedure used commonly to resolve similar disputes, if the name of the arbitration organization that will supervise the arbitration is included in the agreement.
Both parties agree where the dispute resolution proceedings will take place.
Experienced arbitrators selected by the parties will decide the matter. These arbitrators have expertise in the general area of the business. If there is a dispute between two construction companies, then the arbitrators should have experience in construction disputes. This holds for any type of disputes including commercial disputes, employment disputes, labor disputes, maritime disputes, and others.
The arbitrators are experienced and vetted adjudicators. The manner by which arbitrators hear the evidence and decide the dispute is more informal than court litigations. Both parties can agree on one or three arbitrators to decide the dispute. It would take more time and will cost more if there are three arbiters deciding the issue.
They have limited discovery procedures which saves parties time and expense.
Arbitrators will assess the costs and attorney’s fees against the losing party and this the parties agree upon. This is beneficial and encourages early settlement discussions.
Compared to court hearings, arbitration hearings are less formal. There are not formal rules of evidence that binds arbitrators and they are also not bound by the rules of procedures used and required by law.
Arbitrators do not settle or mediate disputes, but they make the final decision, Arbiters only need to hear the evidence and the view of the parties before making a final and binding decision.