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BLOG: What businesses should know about arbitration

Jonathan Choo | June 12, 2012
Arbitration is an established and effective method of dispute resolution that parties can choose to resolve their commercial disputes.

4. Arbitrations are confidential

The entire arbitration process, including the award, is kept private and confidential. This appeals to most businesses that I speak to because it means they don't have to deal with the public finding out embarrassing details about how employee X or decision maker Y got things so wrong. Arbitration guarantees that there will be no mud-slinging in public and no media activity surrounding the dispute.

5. Arbitration offers parties far more control and flexibility than litigation

Probably the biggest advantage that arbitration has over litigation is that parties in an arbitration have control over important factors affecting both time and costs. So for example, parties can agree:

1.      How many arbitrators they want to have on the tribunal (three arbitrators will almost always be more expensive than one arbitrator)

2.      The qualifications of the tribunal members

3.      How quickly they want to conduct the arbitration

4.      What sort of rules they want to govern the arbitration, including rules relating to disclosure of evidence

5.      Where to conduct the hearing

Court litigation simply does not offer parties such flexibility and control.

What this also means is that arbitration allows parties to avoid some of the pitfalls involved in court litigation, particularly in countries or jurisdictions with notoriously inefficient or unreliable court systems. When the alternative in some jurisdictions (especially some Asian countries) is that parties have to wait 10 to 20 years before their dispute is resolved in court and possibly longer for any appeals to be heard, it is easy to see why more and more businesses would prefer to take their disputes out of the hands of local courts and refer them to arbitration instead.

Jonathan Choo is head of Arbitration & Dispute Resolution, Olswang Asia LLP.  He also writes a blog on arbitration issues:




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