Advantages and Disadvantages of Arbitration

947 Words Jan 14th, 2013 4 Pages
“Arbitration or Litigation?”

THE REASONS FOR CHOOSING ARBITRATION OVER LITIGATION

Over the last few decades, as the trade, commerce and investment has developed and evolved in an international aspect throughout the world, the necessity of an alternative resolution for the disputes arising between the parties involved in international business has occurred. From that necessity, international arbitration has emerged as a remedy, which is a method for dispute resolution between states, individuals and corporations providing an effective way of obtaining a final and binding decision on a dispute without reference to a court of law. With this, the controversial question regarding the advantages and disadvantages of arbitration over
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On the other hand, the privacy of arbitral proceedings, and the confidentiality that surrounds the process, is a powerful attraction to companies and institutions that may become involved (often against their will) in legal proceedings. In this respect, as another advantage of arbitration, confidentiality plays an important role in a party’s decision to choose arbitration over litigation, as parties usually desire to keep a dispute and its resolution confidential.

Another advantageous characteristic of arbitration is the continuity of role. In arbitration, the arbitral tribunal deals with only that specific case subject to the arbitration and follows it from the beginning to the end. With this, the arbitral tribunal gets the opportunity to know the parties, the case, the pleadings and the evidences.

When all the above-mentioned characteristics of arbitration are taken in to consideration, it can be said that, arbitration as a dispute resolution method is much more advantageous than litigation. With it’s characteristics such as neutrality, enforceability, flexibility, continuity of role and confidentiality, arbitration is a much more effective method as the current national courts’ jurisdictions has not sufficient instruments to meet the needs of today’s business world.

REFERENCES

Redfern and Hunter on International Arbitration, 5th Edition
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