Definition
An arbitrator is a neutral third-party individual chosen by disputing parties to assist in resolving their conflict. The arbitrator listens to the evidence and arguments presented by each side and makes a determination that is legally binding. This process, known as arbitration, is often an alternative to going through the judicial court system.
Examples
- Commercial Arbitration: Businesses often use arbitrators to settle contract disputes privately and efficiently.
- Labor Arbitration: Employers and unions may turn to arbitrators to resolve disagreements related to employment terms.
- Consumer Arbitration: Customers and companies might engage an arbitrator to handle disputes over services or products.
Frequently Asked Questions (FAQs)
Q1: How is an arbitrator selected?
A1: Arbitrators can be chosen by mutual agreement of the disputing parties or appointed by an arbitration organization.
Q2: Is an arbitrator’s decision final?
A2: Yes, unless the arbitration agreement specifies that the decision can be appealed or reviewed, an arbitrator’s ruling is typically final and binding.
Q3: What qualifications do arbitrators generally have?
A3: Arbitrators usually possess substantial expertise in the relevant field of dispute and may have legal, commercial, or technical backgrounds.
Q4: Can an arbitrator’s decision be challenged in court?
A4: It is very difficult to challenge an arbitrator’s decision in court; courts will usually only overturn an arbitration decision in cases of evident bias, fraud, or procedural misconduct.
Q5: Is arbitration confidential?
A5: Yes, one of the advantages of arbitration is that it is usually confidential, which can help protect the privacy and reputation of the parties involved.
- Arbitration: A process in which a dispute is submitted, with the agreement of the parties, to one or more arbitrators who make a binding decision on the dispute.
- Mediation: A form of alternative dispute resolution where an impartial third party helps the disputing entities reach a mutually agreeable solution.
- Binding Arbitration: Arbitration where the parties agree to accept the arbitrator’s decision as final and enforceable.
- Non-binding Arbitration: Arbitration where the parties can choose whether or not to agree to the arbitrator’s decision.
Online References
- American Arbitration Association (AAA) - adr.org
- International Chamber of Commerce (ICC) Arbitration - iccwbo.org
- The Chartered Institute of Arbitrators (CIArb) - ciarb.org
Suggested Books for Further Study
- “The Handbook of Arbitration” by Thomas H. Colter
- “International Arbitration: A Commentary on the UNICITRAL Model Law” by Howard M. Holtzmann and Joseph E. Neuhaus
- “The Principles and Practice of International Commercial Arbitration” by Margaret L. Moses
Fundamentals of Arbitration: Business Law Basics Quiz
### What is the primary role of an arbitrator?
- [ ] To provide legal representation to a party.
- [ ] To conduct a mediation session.
- [x] To make a binding decision on a dispute.
- [ ] To supervise the execution of a contract.
> **Explanation:** The primary role of an arbitrator is to make a binding decision on a dispute between parties.
### Can an arbitrator's decision typically be appealed?
- [x] No, it is final and binding unless the arbitration agreement allows for an appeal.
- [ ] Yes, it can always be appealed in a higher court.
- [ ] Yes, but only if both parties agree.
- [ ] No, except in international arbitration cases.
> **Explanation:** An arbitrator's decision is typically final and binding, and it can only be appealed if the arbitration agreement specifies appeal provisions.
### What is a key advantage of arbitration over court litigation?
- [ ] It is more formal and structured.
- [x] It is generally quicker and more confidential.
- [ ] It involves a jury decision.
- [ ] It is less legally binding.
> **Explanation:** One key advantage of arbitration over court litigation is that it is generally quicker and more confidential.
### What type of arbitration decision is enforceable by law?
- [ ] Non-binding arbitration
- [x] Binding arbitration
- [ ] Preliminary arbitration
- [ ] Voluntary arbitration
> **Explanation:** Binding arbitration decisions are enforceable by law, requiring parties to adhere to the arbitrator's ruling.
### Which condition might allow a court to overturn an arbitrator's decision?
- [ ] Disputing parties' dissatisfaction with the decision
- [ ] A lack of previous arbitration experience by the arbitrator
- [x] Evidence of bias or procedural misconduct by the arbitrator
- [ ] A formal appeal by both parties
> **Explanation:** Courts may overturn an arbitrator's decision if there is evidence of bias or procedural misconduct by the arbitrator.
### Is arbitration typically open to public observation?
- [ ] Yes, it is a public process.
- [x] No, it is conducted in private.
- [ ] Yes, but only upon court approval.
- [ ] No, unless both parties request a public hearing.
> **Explanation:** Arbitration is typically a private process, not open to public observation.
### What qualifications are often required for an arbitrator?
- [ ] A degree in criminal law.
- [x] Expertise relevant to the dispute field, such as legal, commercial, or technical knowledge.
- [ ] A government-appointed position.
- [ ] Previous mediation experience.
> **Explanation:** Arbitrators often need expertise relevant to the dispute, including legal, commercial, or technical knowledge.
### How are arbitrators generally selected?
- [x] By mutual agreement of both parties or through an arbitration organization.
- [ ] By random selection from a governmental registry.
- [ ] By recommendation from legal counsel.
- [ ] By direct appointment from a court.
> **Explanation:** Arbitrators are generally selected by mutual agreement of both parties or through an arbitration organization.
### What makes arbitration a preferred method for resolving disputes?
- [ ] Its high public profile.
- [x] Its efficiency, confidentiality, and flexibility.
- [ ] Its requirement for jury involvement.
- [ ] Its limited enforceability.
> **Explanation:** Arbitration is preferred for its efficiency, confidentiality, and flexibility.
### How does non-binding arbitration differ from binding arbitration?
- [x] Non-binding arbitration allows parties to reject the arbitrator's decision, while binding arbitration does not.
- [ ] Non-binding arbitration involves a judge, while binding arbitration uses a neutral party.
- [ ] Non-binding arbitration is only used in international cases, while binding arbitration is used domestically.
- [ ] Non-binding arbitration always involves mediation.
> **Explanation:** Non-binding arbitration allows parties to reject the arbitrator's decision if they are unsatisfied, while binding arbitration decisions are final and enforceable.
Thank you for exploring the essential concepts of arbitrators and arbitration with our detailed glossary and engaging quiz. Continue to advance your understanding in the field of business law!
