What’s Arbitration in Regulation: Its Process & Significance


If you’re looking for an explanation of arbitration, this article will help you figure out what arbitration is in law.

Two reputable construction companies, for example A and B, are fighting over a piece of land, A claims it is their property and B claims it is their property. Both parties want to resolve this matter as soon as possible so they can start construction as soon as possible.

Now let’s take two political parties C and D, they have an argument about something and want to solve their problems legally, but they don’t want their case to go public as this could damage their reputation. In both of the above cases, both sides want to resolve their dispute but, for obvious reasons, don’t want to knock on the courtroom door.

You can solve it through an alternative method. You choose a third party who is neutral. That third party will receive evidence from both sides and will be asked to give the final verdict. This saves them time, money, and their reputation by keeping their issue private.

What is the correct method of arbitration?

When two parties have a problem that both of them cannot solve on their own, they must go to an arbitration tribunal for a peaceful settlement of their problem.

To do this, they must first establish an arbitration clause in which both parties agree that they will accept the arbitrator’s decision.

An arbitrator is the third (neutral) party who is introduced by mutual agreement of both parties to resolve their matter.

The time of the session is determined and a neutral environment for the sessions is chosen so that neither party objects to the other party having the benefit of home court.

Both parties will be asked to provide evidence on their behalf and the arbitrator will be instructed to go through it all thoroughly.

After analyzing the evidence and hearing the stories of both sides, the arbitrator will make his final judgment and both parties must accept and comply with the decision.

Does the arbitration have any legal significance?

Arbitration has legal value. The arbitrator’s decision is considered official and lawful. When the case is summarized, a certificate of arbitration will be issued. If the other party refuses to accept the arbitrator’s final judgment, the first party can knock on the courtroom door and the court will force the other party to accept the decision.

Which questions cannot be arbitrated?

The following two questions cannot be arbitrated and must be addressed in legal proceedings:

  1. Matters involving crime such as murder, family law, and status cannot be resolved through arbitration. Such cases must be dealt with in the courtroom and due process must be held. However, if the private rights of two parties are involved, this can be brought to arbitration for the solution.
  2. Arbitration is not recommended to protect civil rights. For example, marital matters may or may not be arbitrated. Cases of custody may also not be resolved through arbitration. In addition, industrial disputes related to the payment of income taxes and other tax matters cannot be resolved through arbitration as they are government related. Such matters must be brought under the approval of the court and resolved in the manner prescribed by law, that is, through the courtroom.

What are the pros and cons of arbitration?

  1. Since both parties trust the arbitrator to be neutral, his decision will be respected and accepted by both parties.
  2. This saves time as court cases take longer to resolve. Arbitration has the advantage that this time is saved.
  3. It is cheaper than legal proceedings, in legal proceedings both parties have to employ lawyers, arbitration saves them from having to do this.
  4. It is a private process and saves the reputations of both parties by keeping the entire process safe from the public.
  5. If the arbitration provision is binding, the losing party has no other options, it must accept the decision anyway. You cannot appear in court or withdraw from accepting the decision.

The parties cannot cross-check the evidence presented by the other party. Unlike in legal proceedings, in arbitration proceedings, evidence is kept secret from the other party and the other party cannot investigate or cross-check the evidence.

About the author


Vipul is a professional blogger and online advertiser based out of Bengaluru, India. Always on the lookout for new ways to make money, Vipul explains all the possible ways that can help anyone make passive income online. You can connect on Twitter, Linkedin & Facebook

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