Benefits of Arbitration
Arbitrations present multiple benefits to the parties for resolution of their dispute, which ultimately becomes the determining factor in the choice of arbitration as opposed to court litigation. The most distinguished ones include:-
Flexibility
Given its consensual nature, arbitration allows the parties to agree on the procedures they want to apply to their arbitration. The agreed procedures shall typically be contained in the arbitration agreement or in a set of rules which the parties agree to apply to the arbitration or alternately be agreed between the parties on an ad hoc basis during the course of the arbitration itself. Accordingly, the flexibility to apply tailor-made procedures in the resolution of their dispute, makes arbitration a viable option.
Neutrality
Parties are not only free to choose a neutral arbitral venue which is independent of the nationalities of the parties, but they also have the ability to appoint independent arbitrators of their choice to privilege a neutral tribunal. Of essence is the fact that the place of arbitration also determines which court has supervisory jurisdiction over the arbitration. The choice for a neutral venue is of prime relevance, especially in international disputes where parties are reluctant being in the home territory of the opposing party.
Confidentiality
Arbitration hearings are conducted in private, as opposed to court proceedings which are normally held in public. Furthermore, awards remain confidential and are not normally disclosed or published, through mutual agreement between parties. This is conducive to keeping sensitive commercial information out of the public domain and resolving disputes discretely and where possible preserving business relationships between the parties.
Enforceability
Enforcement of foreign court judgements can be problematic in the absence of an enforcement bilateral treaty. In contrast, an arbitration award can be enforced in over 150 jurisdictions where each of the Convention parties undertake to recognise and enforce arbitral awards made in other signatory countries, pursuant to the New York Convention – which is the most widely recognised enforcement instrument in the world.
Finality
Arbitration awards are usually final and not subject to review on the merits, implying that prolonged court appeal process can be avoided, thus providing more assurance and a faster route to enforcement for the winning party.
Time and Cost Efficiency
Given the flexibility and finality of arbitration proceedings, resolving disputes through arbitration, is a faster and more cost effective alternative than through court litigation.
Choice of Arbitrators
In arbitration, the parties mutually play a crucial role in selecting the arbitrator or panel of arbitrators who will decide their dispute. This presents as an opportunity to the parties in selecting an arbitrator who is neutral to the parties and also having the necessary expertise to decide on the dispute especially if the dispute involves technical issues that are industry or case specific.