Typically, when there is a legal dispute between parties, the trial is often the last stage that parties have to undergo to achieve an outcome. However, trials are a costly and time-consuming affair. As such, there are other methods of dispute resolution available for one to take. In recent decades, the legal landscape in Singapore has shifted and geared towards the development of the ADR sector. Two very common and popular means of alternative dispute resolution (“ADR”) is mediation and arbitration. In this article, we shall explore the arbitration as one of the other methods of ADR, after having addressed mediation in our other article.
What is Arbitration?
Arbitration is another common ADR process which involves the parties in a dispute heard before a neutral third party, such as an arbitrator, to make a decision after hearing the respective parties. This is a fundamental difference between mediation and arbitration – the outcome of mediation is dependent on parties’ voluntary decision to come to an agreement to settle, as opposed to arbitration whereby the arbitrator makes the decision. As such, if the disputing parties are unsure of what they wish to gain or achieve and are open to solutions given to them, having the dispute heard by an arbitrator to make a final decision may be more suited.
An arbitration hearing is a more formal process than that of mediation. As such, parties and their appointed solicitors shall present their cases and positions to the arbitrator, who shall hear both parties before making a decision. This naturally would mean that there is ultimately a winning and losing party involved in arbitration and that it is a more adversarial process than mediation. As such, arbitration is commonly used in resolving business disputes.
Another issue to note would be that parties cannot be forced to attempt arbitration. Often, there are provisions or clauses in business contracts determining the dispute resolution mechanism. In such a case, if provided for, parties have to adhere to the dispute resolution provision in the business contract. However, there can be circumstances whereby it is not provided for, and the disputing parties may not agree to resolve the matter by way of mediation or arbitration. Alternatively, in cases whereby either one or both parties do not wish to attempt to participate in mediation or arbitration, disputing parties will find it more effective to commence a lawsuit in those circumstances.
Given that an arbitrator’s decision is final, binding and enforceable, disputing parties considering arbitration should also note that there are limited avenues for appeal. Ultimately, as the decision is made by the arbitrator, the disputing parties do not have as much control over the outcome like that in mediation, and that outcomes achieved often will determine a winning party and a losing party in the arbitration.
